Beyond Individualism in Law and Economics

44 Pages Posted: 9 Jul 2012 Last revised: 24 Sep 2012

See all articles by Robert B. Ahdieh

Robert B. Ahdieh

Texas A&M University School of Law

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Date Written: July 8, 2012


The study of law and economics was built upon two pillars. The first is the familiar assumption of individual rationality. The second, less familiar, is the principle of methodological individualism. Over the last twenty years, law and economics has largely internalized behavioral critiques of the rationality assumption. By contrast, the field has failed to appreciate the implications of growing challenges to its methodological individualism. Where social norms shape individual choices, network externalities are strong, coordination is the operative goal, or information is a substantial determinant of value, a methodology strongly oriented to the analysis of individuals overlooks at least as much as it reveals. Among other potential distortions, indicia of consent may be given greater weight than they deserve, the evolution of law and norms may be underemphasized, and our regulation of information, knowledge, and even the financial markets may be flawed. As with the shift toward a more careful approach to rationality, then, attention to the limits of methodological individualism may lead us to a richer account of law and economics.

Keywords: law and economics, individualism, methodological individualism, rationality, neoclassical economics, Austrian economics, social norms, network effects, network externalities, coordination, coordination games, information, knowledge, behaviorial economics, community

JEL Classification: B31, B41, D83, D84, K00

Suggested Citation

Ahdieh, Robert B., Beyond Individualism in Law and Economics (July 8, 2012). Boston University Law Review, Vol. 91, 2011, Emory Legal Studies Research Paper No. 12-213, Available at SSRN:

Robert B. Ahdieh (Contact Author)

Texas A&M University School of Law ( email )

1515 Commerce St.
Fort Worth, TX 76102
United States

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