Rules and the Possibility of Social Cooperation

Abstract

This paper pursues three aspects of rule-based decisionmaking discussed in Frederick Schauer's jurisprudential writings: 1) the economic analysis of when a single decisionmaker will rationally follow a rule rather than make situation-specific (or, in Schauer's terms, "particularistic") decisions; 2) whether there is something about rule-based decisionmaking which makes it more likely that extralegal norms solving social dilemmas of cooperation or coordination will take the form of rules rather than particularistic decisionmaking under principles; and, 3) how rules may be essential to the preservation of social capital in complex social environments subject to potential herding behavior. On the first point, it is shown that there may be strong path dependence in individual rational decisionmaking, so that a person following a rule does not gain the information necessary to determine whether the alternative of situation-specific decisionmaking would generate a higher return. On the second point, it is argued that the effectiveness (essentially, credible enforcement) of some sorts of social norms may hinge on the fact that the norm specifies a relatively inflexible behavior rather than situation-specific decisionmaking. On the final point, a simple example is adduced to show how once decisionmakers in the society begin to calculate the social optimality of a norm-based practice, they may sequentially determine that it is (myopically) socially optimal to alter the practice, and yet generate a final equilibrium in which all are worse off than under the initial state.