The Essential Role of Empirical Analysis in Developing Law and Economics Theory

20 Pages Posted: 22 Oct 2020

See all articles by Jennifer Arlen

Jennifer Arlen

New York University School of Law; European Corporate Governance Institute (ECGI)

Date Written: October 2020

Abstract

To serve as an effective basis for positive or normative analysis of law, theoretical law and economics analysis must be predicated on models that accurately capture the essential characteristics of the decision-making environment, decision-makers’ available choices, and individuals’ decision-making processes. Empirical analysis of law plays a vital role in helping theoretical analysis achieve this goal. Empirical analyses contribute indirectly by testing the predictions of models; results contrary to theoretical predictions regularly prompt theorists to reexamine the decision-making environment. Empirical analyses contribute directly by providing direct evidence on the decision-making environment, available choice sets or decision-makers mental processes. This interaction of empirical analysis and theory has led theory towards increasing use of models predicated on incomplete information, incomplete contracting, and decision-making that may deviate from rational choice theory.

Keywords: Law & Economics, Law & Economics: Private Law (Topic), Health Law eJournals, Medical-Legal Studies eJournal, Law & Society: Private Law, LSPRL: Torts (Topic), Corporate Law: Corporate Governance Law, Corporate Governance U.S., Consumer Law eJournal, Contracts & Commercial Law eJournal

Suggested Citation

Arlen, Jennifer, The Essential Role of Empirical Analysis in Developing Law and Economics Theory (October 2020). NYU Law and Economics Research Paper No. 20-43, Available at SSRN: https://ssrn.com/abstract=3716542 or http://dx.doi.org/10.2139/ssrn.3716542

Jennifer Arlen (Contact Author)

New York University School of Law ( email )

40 Washington Square South
New York, NY 10012-1099
United States

HOME PAGE: http://https://its.law.nyu.edu/facultyprofiles/profile.cfm?personID=20658

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

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