Abstract
Law and economics is going through a paradigm shift as the influential behavioral school is challenging and remolding its very foundation, i.e., homoeconomicus model. However, neither of the approaches captures the essence of interaction between entrepreneurial heterogeneous agents. The Misesian homoagens approach adequately addresses the deficiencies of the predominant paradigm, opening doors to a far richer legal-economic analysis incorporating real world dynamics of complex market processes.
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Notes
“According to this postulate all analyses must ultimately be couched in terms of the behavior of individuals; all collective phenomena must be explained as composition or perverse effects of individual decisions” (Mackaay 1999, p. 408).
“A fundamental assumption of the law and economics movement is that ‘individuals are rational maximizers of their satisfactions in their non-market as well as their market behavior’” (Mitchell 2002, p. 2).
“… methodological individualism does not require that individuals are nontuistic in the sense that they only take their own wellbeing into account when they make decisions. It is true that in most economic analysis of law the assumption of rationality implies nontuism…” (Kerkmeester 1999, p. 385).
“As is preferred by both Coase and Posner” (Kerkmeester 1999, p. 387).
One way out of this criticism is Friedman’s argument that assumptions are important only in so far as they are able to generate predictions inline with reality. An epistemological discussion on this is far beyond the scope of this paper, for an insightful critique of the positivist approach refer to In Defense of Extreme Apriorism by Murray Rothbard (this is not to say that I entirely agree with the arguments).
An interesting paragraph by Kerkmeester is worth mentioning:
“An important factor in judging the importance of realism of assumptions is the goal one is aiming for. If it is only prediction and control, the use of unrealistic assumptions is fine, as long as they indeed predict well. If, however, the goal is explanation, an approach based on unrealisitic assumptions is not really helpful in providing insights in what really moves a person and in how legal rules really have effects. There is an additional need for a ‘mechanism’ that shows how something could have happened” (1999, p. 394).
“Studies by psychologists and sociologists demonstrate the surprising frequency with which people respond to bad outcomes by changing their beliefs about what counts as bad. An outcome regarded as bad by subjects before choosing may seem good after it results from their choice” (Cooter 2003, pp. 7–8).
For more on this refer to Schools: General by Mackaay (1999)
For goods, leisure, risk, etc.
“… there is something fundamental about the price system and the market economy that is lost when information and learning is treated in a mechanical manner” (Boettke 2001, p. 5).
“Standard models of search presume that agents follow Bayes law for updating their priors as they learn through the search process. This guarantees that actors are not merely passive reactors to given information, but instead are willing to adjust their priors as they acquire more information. The general rule is that they will continue to collect information until the marginal benefit of continued search equal the marginal cost of a, continuing search. While adjustment through learning is evident in the basic model, the actors in the model are nevertheless rather mechanical learners. Interpretation and skillful judgment are not clearly evident in the Bayesian learning process” (Boettke 2001, p. 5).
“I am wiser than this man; it is likely that neither of us knows anything worthwhile, but he thinks he knows something when he does not, whereas when I do not know, neither do I think I know; so I am likely to be wiser then he to a small extend, that I do not think I know what I do not know” (Socrates as quoted by Boettke 2001, p. 1).
"Entrepreneurs are simply those who understand that there is little difference between obstacle and opportunity and are able to turn both to their advantage" (Machiavelli).
“If the market is viewed as a cognitive process, as I contend the Austrian writers tend to do, then asymmetries are what drives the entrepreneurial process” (Boettke 2001, p. 13).
“Man acts because he is dissatisfied with the state of affairs as it prevails in the absence of his intervention…The characteristic feature of man is precisely that he consciously acts. Man is Homo agens, the acting animal…To act means: to strive after ends, that is, to choose a goal and to resort to means in order to attain the goal sought” (von Mises 1960, p. 3).
Hayek’s research program took the “knowledge” turn with his essay “Economics and Knowledge” published in 1937. I interpret the main point of that essay to be that the knowledge that defines the equilibrium state of affairs emerges within the process leading to that equilibrium state rather than existing anterior to that process. Without the market process to generate it, the relevant knowledge would not exist” (Boettke 2001, p. 8).
For a brief history of major contributions to the externalities literature refer to The End of the Externality Revolution by Barnett and Yandle (2005).
“The term ‘subjective’ thus reflects the idea that actions depend upon perceptions and also the idea that different people will generally have different perceptions” (Littlechild 1978, p. 78).
“James Buchanan provides an excellent summary of the implications of this subjective, choice-bound theory of costs.
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Most importantly, cost must be borne exclusively by the decision maker; it is not possible for cost to be shifted to or imposed on others
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Cost is subjective; it exists in the mind of the decision-maker and nowhere else
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Cost is based on anticipation; it is necessarily a forward looking or ex ante concept.
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Cost can never be realized because of the fact of choice itself: that which is given up cannot be enjoyed
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Cost cannot be measured by someone other than the decision-maker because there is not way that subjective experience can be directly observed.
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Finally, cost can be dated at the moment of decision or choice”
(italics added, Brownstein 1980, p. 95–96)
Kerkmeester states “An important drawback of the utility is that it is hard to make interpersonal utility comparisons if such a subjective measuring rod for utility is used” (1999, p. 386). It seems that Kerkmeester while recognizes that the mainstream analysis cannot proceed with both subjectivism and utility maximization, does not seem to accept that it is impossible to make interpersonal utility comparison rather he thinks it is hard to do so. I am yet to come across a method of making interpersonal utility comparison while remaining in the realm of positive social science.
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“It is customary to say that acting man has a scale of wants or values in his mind when he arranges his actions. On the basis of such a scale he satisfies what is of higher value i.e., his more urgent wants, and leaves unsatisfied what is of lower value i.e., what is a less urgent want. There is no objection to such a presentation of the state of affairs. However, one must not forget that the scale of values or wants manifests itself only in the reality of action. The scales have no independent existence apart from actual behavior of individuals. The only source from which our knowledge of scales is derived is the observation of man’s actions. Every action is always in perfect agreement with the scales of values or wants because these scales are nothing but an instrument for the interpretation of a man’s acting” (italics added, Mises as quoted by Block 1983, p. 20).
Two fundamental axioms described by Barnett and Yandle capture the essence of Coase theorem:
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“All inefficiencies, including Pareto relevant externalities, represent unexploited gains from trade
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When free exchange is allowed and transactions are costless, all Pareto relevant inefficiencies will be negotiated away” (2005, p. 10).
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Landa (2005) states “In a world without transaction costs, institutions would be redundant. Institutions reduce the transaction cost by reducing uncertainty” (p. 1179). This idea is widely recognized in the literature, and is one of the foundations of institutional law & economics. The point made with regards to the rebundling of property rights and creation of innovative institutions by entrepreneurial action is entirely different; for here our concern is not with voluntary transactions made more efficient by reducing uncertainty that may arise due to imperfect knowledge of individuals with regards to mutually expected and acceptable behavior. We are here concerned with voluntary interaction that never happened because of high transaction cost between thousands or even millions of agents, a situation which dramatically alters due to entrepreneurial action.
Such entrepreneurial action has the advantage over a liability system enforcement by courts in that while the courts cannot adequately account for ‘sentimental value’ and other uncommon valuations, whereas entrepreneurial action elicits true valuations of the agents affected by the externality.
Demsetz (1967) that “A primary function of property rights is that of guiding incentives to achieve greater internalization of externalities”, which is essentially the argument I present here, albeit with reference to the analytical differences between the homoeconomicus and homoagens models. However, Demsetz also states that “In general, transaction cost can be large relative to gains because of “natural” difficulties in trading…”; here however, I would like to express certain disagreements. By ‘natural’ difficulties in trading Demsetz seems to be pointing towards the nature of good involved or the fact that number of people involved maybe too many, however, from a subjective point of view all we can say that no entrepreneur has as of yet devised an innovative bundling of the property right to internalize the externality. There are no ‘natural’ limitations as such in the Misesian system, only ‘limitations to knowledge’ that are continuously solved because of the incentive structure.
“The overarching point is that the problems facing a judge attempting to implement a Coasean-type solution are similar to those faced by a central planner attempting to determine an “efficient” outcome for any market. There is no reason to think that it would be any easier for a judge implementing a least cost avoider rule to determine the efficient outcome in terms of allocation of property rights in the market for railroad services and farmer’s crops than in terms of prices and quantities, in the market for bread next year. The information requirements would be identical. In fact, if the crop is wheat, the Coasean judge would actually have to know the efficient outcome in the market for bread next year in order to come to his judgment. Indeed, this is a problem faced equally by the Coasean judge in determining the efficient assignment of property rights and the Pigouvian tax assessor in determining the efficient externality tax” (italics added, Cordato 2000, p. 5).
“To assert that the wants and desires of man are fixed and static quantities is to misunderstand the nature of the soul, to deny the facts, to make civilization inexplicable (Bastiat 1964, p. 46)”.
“The output mix that results when the exchange of property rights is allowed is efficient and the mix is independent of who is assigned ownership (except that different wealth distributions may result in different demands)” (italics added, Demsetz 1967, p. 349).
“Some economists treat the Coase Theorem as a purely analytic or explanatory device. Whether it can be used to successfully predict or explain political decision-making is an empirical question. But to the extent that Coase and his followers commend the Theorem as a decision procedure for politicians and judges, it is a legitimate target of moral criticism. In its normative guise, the Coase Theorem treats all harms created by externalities as joint products; in doing so, it reduces the concept of responsibility to the more mathematically tractable notions of transactions costs and economic gains and losses.
To the ordinary observer, however, responsibility is a conceptual category the moral implications of which are logically independent of the concepts of economic efficiency or social welfare. Who is responsible for the creation of a negative externality is one question. Who it would be socially useful to assign legal liability is another question. It is likely that the answer to both questions is often the same, and when this is true, liberals may well agree with Coase that the two parties will internalize the externality without state intervention. But this should not mask the deep inconsistency between the two approach to externalities, nor should it blind us to the moral cost of using the Coase Theorem as a normative basis for public policy and judicial decision” (Anomaly 2006, p. 15).
“If a good is Samuelsonian public, the marginal cost of adding an additional consumer is zero, and this can be tested with date on the cost of public goods. Empirical studies on many goods confirm that government output empirically is a private good, not a public good” (Holcombe 1997, p. 11). Moreover, the neo-classical discussion often considers the wrong cost at the wrong time; “…when a decision is being reached whether the market or the government should provide the bridge services, the relevant marginal cost is the cost of constructing the bridge” (Brownstein 1980, p. 102). This is the relevant marginal cost for every marginal unit of the bridge build is a marginal consumption or another investment opportunity sacrificed by those who contributed the resources. This logical problem with the neo-classical position is highlighted by the fact that economic analysis differs with respect to whether a good once created lasts for long period of time (bridge) or whether a good requires continues investments (toothpaste) despite the fact both goods involve sacrifice of marginal resources by investors.
For an insightful criticism of the neo-classical position see A Theory of the Theory of Public Goods by Holcombe (1997).
There are various example of private provision of the so-called public goods including “privately owned and operated turnpikes…in England in the eighteenth and nineteenth centuries” (Block 1983, p. 27), lighthouses (Coase), etc. Some of the most interesting examples of private provision of an entire array of goods which are of ‘public goods nature’ is from Maritime History where many firms and societies engaged in the collection and dissemination of information on the weather, flow of currents, condition of ships, risk associated with carrying certain kinds of cargo on certain kinds of ships, and other information vital to navigation and trade. Once this information was published it was a pure public good.
“Indicative of the Salem East India Society’s intense interest in the dissemination of information is the fact that one member was fined for failing to provide a written record of the navigational, meteorological, and geographical observations he had made during a recent voyage. Members were expected to share such information with one another, which cooperation made it possible for them to compose sailing directions for home port, a distinctive and ‘useful service performed by marine societies” (Gleason as quoted by Sechrest).
Moreover, the maritime community spontaneously developed and followed various norms including exchanging of information regarding time, name of ship, etc. when meeting another ship on sea, helping fellow ships and crews who maybe short of food and water, rescuing crew of misfortunate ships, and so on. Much of the communication of course happened on the basis of signals which were again spontaneously privately developed, again a public good. For more on this refer to Private Provision of Public Goods: Theoretical Issues and Some Examples from Maritime History by Sechrest (2003).
“Public goods can also be provided by being tied to purchases of private goods. Shopping malls, for instance provide shoppers with a variety of services that are traditionally considered public goods: lighting, protection services, benches, and rest-rooms, for example. Charging directly for each of these services would be impractical. Therefore, the shopping mall finances the services through the receipts from the sale of private goods in the mall. The public and private goods are ‘tied’ together” (Cowen 2008, 208).
“Another example of a public good produced in the private sector is microcomputer software. One the program is written, additional users can copy the program, making it available to additional users at no cost to the existing users, so the microcomputer software is a Samuelsonian public. Because it is so costly to prevent such copying, it is also non-excludable. Yet Bill Gates became one of the richest men in the world in a period of about a decade, selling a public good. This example is all the more interesting in the middle 1990s because, while microcomputer software is a public good, the computers that run the software are private goods…” (italics added, Holcombe 1997, p. 7).
“…what Coase found was that the building and operating of lighthouses by private firms and individuals was actually quite common in the British Isles. By 1820, for example, 34 of the 46 lighthouses then in operation had been build privately, and 22 were still operated by private individuals” (Sechrest 2003, p. 22). In fact one several instances government interference restricted or delayed the building of new private lighthouses on important routes.
“Whenever they expected a vessel to arrive at night, the residents of Nantucket Island would display a light from the window of a private dwelling”, of course Samuelson’s homoeconomicus driven by ‘selfish’ motives would never engage in such an action.
For experimental results on Coase Theorem and Pre-trial bargaining and settlement see Experimental Law and Economics by McAdams (1999).
“…the belief that goods things are more likely than average happen to us and bad things are less likely than average happen to us” (Korobkin and Ulen 2000, p. 1091).
“…tendency of actors to over estimate the ex ante prediction that they had concerning the likelihood of an event’s occurrence after learning that it actually occurred” (Korobkin and Ulen, p. 1095).
“…probabilistic assessments are often flawed because actors fail to adjust sufficiently their assessments from preexisiting cognitive anchors” (Korobkin and Ulen 2000, p. 1100).
“…individuals often place a higher monetary value on items they own than on those they do not own” (Korobkin and Ulen 2000, p. 1108).
“Systems of theories are tested by deducing form them statements of a lesser level of universality. These statements in their turn, since they are to be inter-subjectively testable, must be testable in like manner—and so ad infinitum” (Popper 1959, p. 46).
“There is simply too much credible experimental evidence that individuals frequently act in ways that are incompatible with the assumption of rational choice theory” (Korobkin and Ulen 2000, p. 1055).
“Even within mainstream economics, where hard-core notions of rationality have long been protected from critical attack, there are recent signs of a move in this direction. Work by experimental economists is increasingly being interpreted as establishing the importance of the institutional and cultural context of decision making. The new subdiscipline of ‘neuroeconomics’ abandons Catersian dualism and attempts to ground rational deliberation and choice on neurological and biological mechanisms…” (Hodgson 2006, p. 142).
“Reputation and indirect effects: The person may expect to profit in the future for having the reputation of being a generally considerate person, and not a vigilant chair-grabber” (Sen 1977, p. 747).
“Social commitment and moral imperatives : She may not think it morally right to graph the most comfortable chair, cutting others out, and such moral sentiments could be explicitly followed or only implicitly obeyed” (Sen 1977, p. 748).
“Direct welfare effects : The person’s well-bring may be affected directly by the process of choice (for example, by what people think of her—she may not enjoy the looks she gets as she makes a dash for the great chair), and this requires that reflective utility functions (and the person’s conception of her self-interest) be defined not just over culmination outcomes (such as final commodity vectors, as in standard consumer theory), but inter alia also over choice processes and their effects” (Sen 1977, p. 748).
“Conventional rule-following : She may be simply following an established rule of proper behaviour (as the on-going norm), rather than being influenced by direct welfare effects, or by reputation effects, or even by any self-conscious ethics” (Sen 1977, p. 748).
“…before labeling a response tendency a cognitive flaw, we should clarify the interpersonal, institutional, or political goals people are trying to achieve by making particular judgments” (Lerner and Tetlock as quoted by Mitchell 2002, pp. 68). But how do we go about eliciting people’s goals, if one were to rely on what people say their goals are, then all we can say is whether people think of themselves as having been rational in taking particular decisions.
There are several methods he invokes in incorporating these behaviours into the mainstream approach, including the difference between ‘optimizing’ (which is universal) and ‘maximizing’ (within limited information set at a point of time), placing new choice constraints, for example in case of ‘menu-dependence’ and ‘chooser-dependence’ the choice function is reformulate from P i to P j,S i where j reflects ‘chooser-dependence’ and S reflects ‘menu-dependence’. What is fundamentally missing in the paper by Sen (Maximization and Act of Choice) is any discussion on why the anamolies he describes as menu or chooser dependence and so on could not be the tip of the ice berg of large tendencies of human behavior that do not fit into the neo-classical box. Also, some of his characterizations are not entirely convincing and entail an element of arbitrariness, for example why should the fact that a person goes to vote inspite of knowing that her individual influence on outcomes would be negligible because she values “her opportunity to choose”. Why cannot one say she goes to vote for her candidate moved by caste sentiments or ideology or because she has been commanded to do so by the village elder or because everyone else around her is doing so? This is not to say people do not value the opportunity to choose, but to challenge the caricature of human being as maximizing something or the other. Some of the anomalies pointed out by Sen are merely a small part of a larger group of biases that have been unearthed by experimental and behavioral law and economics.
“Is the statement “this is an example or instance of maximizing behavior” a meaningful and scientific one (as per the positivist position)? Clearly not. Since the set of possible falsifiers is empty, any behavioral instance can be “explained” in terms of maximizing something. But the hypothesis, “this is an instance of maximizing sales”, can be refuted by appropriate behavior, and so is a meaningful statement. This produces a curious paradox. The more general statement about maximization is meaningless (or unscientific), but the more particularized version of it constitutes a positive scientific hypothesis” (italics added, Rizzo 1978, p. 17).
“One must not confuse the fact that a structure is used in some way (consider again the spandrels, ceiling spaces, and Aztec bodies) with primary evolutionary reason for its existence and conformation” (Gould and Lewontin 1979).
“Unfortunately, a common procedure among evolutionists does not allow such definable rejection for two reasons. First, the rejection of one adaptive story usually leads to its replacement by another, rather than to a suspicion that a different kind of explanation might be required. Since the range of adaptive stories is as wide as our minds are fertile, new stories can always be postulated…Second, the criteria for acceptance of a story are so loose that many pass without proper confirmation…” (Gould and Lewontin 1979).
“For instance, according to Popper’s theory, it was irrational to retain and further elaborate Newton’s gravitational theory after the discovery of Mercury’s anomalous perihelion; or again, it was irrational to develop Bohr’s old quantum theory based on inconsistent foundations. From my point of view these were perfectly rational developments: some rearguard actions in defense of defeated programmes—even after the so-called ‘crucial experiments’—a perfectly rational” (Lakatos 1970, p. 117).
“There is only one way to make sure of the validity of a chain of logical reasoning. This is to put it in the form in which it is most easily testable: we break it up into many small steps, each easy to check by anybody who has learnt the mathematical or logical technique of transforming sentences” (Popper 1959, p. 99).
Sunstein and Thaler argue that the ‘anti-paternalist’ position is based on a false assumption:
“… almost all people, almost all of the time, make choices that are in their best interest or at the very least are better, by their own lights, than the choices that would be made by third parties. This claim is either tautological, and therefore uninteresting, or testable. We claim that it is testable and false…”.
Mitchell (2002) also points out certain deficiencies and biases in the experimental methods and reporting of experiments by scholars of the behavioral school. I am not in a position to remark on such claims, neither are these claims relevant with regards to this paper.
“In particular, differences in education, training, cognitive capacity, thinking dispositions, sex, and cultural background across individuals appear to be reliably associated with different level of cognitive performance. Furthermore, emotional differences, developmental differences, and different forms of mental processing appear to be associated with different levels of cognitive performance within individuals. Therefore, depending on the characteristics of the individual and the system of thought activitated in a particular decision-making situation, the behavior of different groups of individuals and the behavior of the same individual over time may vary considerably, from perfect rationality to seeming irrationality” (Mitchell 2002, p. 31).
“…the risk preferences expressed by a person in a happy mood may differ significantly from the risk preferences expressed by the same person in a sad mood” (Mitchell 2002, p. 48).
“The concentration on the determination of prices has led to a narrowing of focus which has had as a result the neglect of other aspects of the economic system….This neglect of other aspects of the system has been made easier by another feature of modern economic theory—the growing abstraction of analysis, which does not seem to call for a detailed knowledge of the actual economic system or, at any rate, had managed to proceed without it… What is studied is a system which lives in the mind of the economists but not on earth. I have called the “result blackboard economics” (Coase, The 1991 Alfred Nobel Memorial Prize Lecture in Economic Sciences).
“…the logical-positivist idea that confirmation of theories is relevant has come under attach from the philosophy of science known as critical realism, with Karl Popper as its founder. Popper argued confirmations are never able to prove that a theory is correct” (Kerkmeester 1999, pp. 393).
“By order we shall throughout describe a state of affairs in which a multiplicity of elements of various kinds are so related to each other that we may learn from out acquaintance with some spatial or temporal part of the whole to form correct expectations concerning the rest, or at least expectations which have a good chance of proving correct” (Hayek, 1979, p. 36).
“An analysis of spontaneous order may also throw light on some theoretical problems about rationality. Game theorists typically assume that their games are played by ideally rational individuals who have full knowledge of each other’s preferences and attitudes towards risk. Many game theorists have regarded it as self-evident that, in such a situation, there must be a unique rational strategy for each player, which can be identified by deductive reasoning. If this is true, then individuals who follow a convention cannot be fully rational…Conversely, the claim that every game has a uniquely rational solution must be false” (italics added, Sugden 1989).
in the homoeconomicus sense.
“Social context is particularly important in assessing the rationality of legal decisions, for many legal decisions may serve as expressive function that cannot be easily understood unless the social meaning of the behavior is taken into account” (Mitchell 2002, p. 63).
“Living as members of society and dependent for the satisfaction of most of our needs on various forms of co-operation with others, we depend for the effective pursuit of our aims clearly on correspondence of expectations concerning the actions of other on which our plans are based with what they really do” (Hayek 1979, pp. 36).
When paternalism of any kind causes individual action to be different from that which would have resulted from the rule-following nature of man it leads to a mismatch of expectations and hence a dampening of spontaneous order.
“…an expectation in grounded in induction from experience—that other people will follow the convention. Given this expectation, each person finds it in his interest to follow the convention. And given that a person is following the convention himself, he not only expects the people with whom he interacts to demand no more than the convention allows them, he also wants them to behave this way” (Sugden 1989, p. 90).
“The same external events produce in different men and in the same men at different times different reactions” (von Mises 1978, p. 37).
“In social theory, Hayek’s devastating critique of Cartesian rationalism entails that, whatever else it might be, social order cannot be the product of a directing intelligence” (Gray, 25).
The importance of these moral codes and unwritten laws was recognized by the ancient Greeks, following is a passage of Democritus quoted by Popper:
“‘…But this freedom does not make us lawless. We are taught to respect the magistrates and the laws, and never to forget that we must protect the injured. And we are also taught to observe those unwritten laws whose sanction lies only in the universal feeling of what is right” (italics added, Popper 1945, p. 163).
Sunstein and Thaler have in a section titled “How to Choose: Tool Box of the Libertarian Paternalist” discussed some of the methods of applying their idea including ‘cost-benefit analysis’. However what is omitted is ‘what to apply these tools to?’, ‘what are the choices which shall be subjected to the application of these tools?’, ‘whose choices shall be influenced by these tools?’.
"The successful combination of knowledge and aptitude is not selected by common deliberation, by people seeking a solution to their problem in a joint effort; it is a product of individuals imitating those who have been more successful and from their being guided by signs or symbols, such as process offered for their products or expressions of moral or aesthetic esteem for having their observed standards of conduct-in short, of their using the results of the experiences of other“(Hayek 1979).
“If freedom were not treated as the supreme principal, the fact that the promises which a free society has to offer can always be only chances and not certainties, only opportunities and not definite gifts to particular individuals, would inevitably prove a fatal weakness and lead to its slow erosion” (Hayek 1960, p. 68).
“What Plato demands therefore, is the rule of learnedness—sophocracy, if I may say so” (Popper 1945, p. 127).
“He (Plato) believes that the original model of his perfect state can be found in the distant past, in the dawn of history; for if the world decays in time, then we must find increasing perfection the further we go back into the past. The perfect state is something like the first ancestor, the primogenitor, of the later states, which are, as it were, the degenerate offspring of this perfect, or best, or ‘idea’ state; an idea state which is not a mere phantasm, nor a dream, but which is in stability more real indeed than all those decaying societies which are in flux, and liable to pass away at any moment” (Popper 1945, pp. 19).
Some have interpreted Hayek in “Road to Serfdom” to have claimed that democratic socialism would inevitably degenerate into totalitarian systems, I make no such claim, only illustrate the logical necessity.
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Acknowledgments
I would like to express my sincerest gratitude to Prof. Elizabeth Krecke, Prof. Pierre Garello, Mr. Sauvik Chakraverti, Mr. Ragupathy Venketachalam, Mr. Lucas Leger, and the two anonymous referees for their insightful comments on specific contents of the earlier drafts, and for broader discussions on the issues dealt with in this paper. Needless to say, any and all shortcomings are my own.
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Paper was written as the thesis for the European Master in Law & Economics program at University of Aix-Marseille III in April-July 2008.
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Veetil, V.P. Conceptions of rationality in law and economics. Eur J Law Econ 31, 199–228 (2011). https://doi.org/10.1007/s10657-009-9137-3
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DOI: https://doi.org/10.1007/s10657-009-9137-3
Keywords
- Homoeconomicus
- Misesian homoagens
- Behavioral law and economics
- Knowledge problem
- Entrepreneur
- Heterogenous agents
- Popperian falsification