Taking Outcomes Seriously

Utah Law Review, No. 2, pp. 861, 2012

42 Pages Posted: 7 Jan 2013

Date Written: January 7, 2013


The goal of economic efficiency is to promote best outcomes by maximizing the satisfaction of people’s preferences. Given the crucial role of outcomes in efficiency analysis, surprisingly little attention has been devoted to the question of what an outcome actually is. Law-and-economics scholars typically disregard this issue, implicitly adopting the narrowest possible definition of outcome, namely end-results in terms of wealth. Furthermore, no attempt has been made to examine the fundamental question of what notion of outcomes individuals actually embrace.

This Article aims to fill this void by presenting an experimental study of perceptions of outcomes, conducted with both laypersons and experienced businesspeople. The findings demonstrate that individuals embrace a broad conception of outcomes, one which includes various factors beyond end-results. Specifically, factors such as how the outcome was brought about, the identity of the parties involved, the voluntariness or non-voluntariness of their behavior, and the intentionality or non-intentionality of their acts significantly affect the value of the outcome.

These findings are highly relevant for the economic analysis of policies, legal rules, institutions, and the like. Since efficiency analysis aims at maximizing welfare, measured by the extent to which preferences are fulfilled, it should take into account the prevalent broader perception of outcomes. A narrow definition of outcomes, customary in the economic analyses of legal issues, may actually lead to inefficiency. The existing deficiency in efficiency analysis can be easily corrected, as demonstrated in several contexts, including the efficient breach doctrine, takings of property, the choice between property rules and liability rules, and decentralization schemes.

Keywords: experimental legal studies, law and economics, consequentialism, outcomes, well-being, preferences, property law, contract law, remedies, takings compensation, efficient breach, land assembly, eminent domain, public/private distinction, homeowners association, zoning, decentralization

JEL Classification: C91, D60, D61, D63, I3, K10, K11, K12

Suggested Citation

Lewinsohn-Zamir, Daphna, Taking Outcomes Seriously (January 7, 2013). Utah Law Review, No. 2, pp. 861, 2012, Available at SSRN: https://ssrn.com/abstract=2197179

Daphna Lewinsohn-Zamir (Contact Author)

Hebrew University - Faculty of Law ( email )

Mount Scopus
Mount Scopus, IL 91905
972-2-5823845 (Phone)
972-2-5829002 (Fax)

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