Decision Theory and Allocating Decision Making in the Firm

Theories of Choice. The Law and Social Science of Decision Making, Oxford University Press (2020, Forthcoming)

Notre Dame Legal Studies Paper No. 191217

17 Pages Posted: 20 Dec 2019

Date Written: December 19, 2019

Abstract

I was invited to discuss decision theory and the firm for a conference on theories of choice. I believe that it is possible to deal productively with the subject matter of choosing and making decisions without actually settling upon any particular theory of choice. This is what transpires within the law of business organization. The law itself need not, and in fact does not, settle upon any particular theory of choice because the law does not consider itself the ultimate decision maker. Rather, it develops rules to allocate decision-making authority among various parties, and leaves the ultimate decision makers free to select from among the various theories of choice for themselves. Thus, the law sees its role as offering choices to business people. My contribution, then, is the claim that a settling upon a theory of choice is not always necessary. It is through this lens that I discuss decision theory and the allocation of decision making authority in the firm.

Keywords: corporate governance, corporate law, fiduciary duty, conflicts of interest, cost-benefit analysis, decision theory, institutional choice

JEL Classification: K20, K22

Suggested Citation

Velasco, Julian, Decision Theory and Allocating Decision Making in the Firm (December 19, 2019). Theories of Choice. The Law and Social Science of Decision Making, Oxford University Press (2020, Forthcoming), Notre Dame Legal Studies Paper No. 191217, Available at SSRN: https://ssrn.com/abstract=3506810 or http://dx.doi.org/10.2139/ssrn.3506810

Julian Velasco (Contact Author)

Notre Dame Law School ( email )

2142 Eck Hall of Law
P.O. Box 780
Notre Dame, IN 46556-0780
United States
574-631-4965 (Phone)

HOME PAGE: http://law.nd.edu/directory/julian-velasco/

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