The Optimal Complexity of Legal Rules

Abstract

Legal systems must deal not only with the cognitive limitations of ordinary individuals, but must also seek to curb the excesses of individual self-interest without conferring excessive powers on state individuals whose motives and cognitive powers are themselves not above question. Much modern law sees administrative expertise as the solution to these problems. But in fact the traditional and simpler rules of thumb that dominated natural law thinking often do a better job in overcoming these cognitive and motivational weaknesses. The optimal strategy involves the fragmentation of government power, and the limitation of public discretion. Three types of rules that help achieve this result are rules of absolute priority, rules that judge conduct by outcomes not inputs, and rules that use simple proration formulas to allocate benefits and burdens.