Legal Analysis of Economics: Solving the Problem of Rational Commitment

25 Pages Posted: 28 May 2008

See all articles by Bruce Chapman

Bruce Chapman

Faculty of Law, University of Toronto

Abstract

This Article offers a "legal analysis of economics" in contradistinction to the prevailing "economic analysis of law." The economic problem that forms the subject matter of the theoretical legal analysis is the problem of rational commitment. The difficulty here is that an agent can have a reason, or a preference, to commit to do something that he will have no reason actually to do, or which will be contrary to preference when the time comes actually to do it. Familiar examples include the problem of making credible threats or promises.

This Article develops an account of the rational actor that differs from that conventionally supplied by rational choice theory to handle this problem. Borrowing from some work by the philosopher-economist John Broome, the Article argues that rational decision-making involves more than acting on the balance of reasons, or all-things-considered preferences; it also consists in following the normative requirements of practical rationality. After articulating the logical distinction between reasons and normative requirements, the Article argues that this richer account of the rational actor is manifested in common law adjudication and, more particularly, in the special relationship that exists between decided cases and defeasible legal rules. The Article suggests that this is exactly the sort of rationality that the economist needs to comprehend, and solve, the problem of rational commitment.

Suggested Citation

Chapman, Bruce, Legal Analysis of Economics: Solving the Problem of Rational Commitment. Chicago-Kent Law Review, Vol. 79, No. 2, 2004. Available at SSRN: https://ssrn.com/abstract=1138434

Bruce Chapman (Contact Author)

Faculty of Law, University of Toronto ( email )

78 and 84 Queen's Park
Toronto, Ontario M5S 2C5
Canada
416-978-6911 (Phone)
416 978 2648 (Fax)

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