Economic Approaches to Legal Reasoning: An Overview

Economic analysis has contributed to a better understanding and a better functioning of law at different levels of generality. As far as legal reasoning is concerned, these contributions fall into two large groups. Economics in legal reasoning concerns arguments about the purposes and consequences of legal rules and principles that are acceptable in court as legally relevant, including (1) predictions of the likely consequences of alternative legal decisions; (2) technical normative arguments about the best means to achieve a legally determined purpose; and (3) welfarist normative arguments about the desirable goals of specific laws. Economics of legal reasoning, in turn, includes (1) explanatory models of legal processes in terms of rational activity of individuals, corporate entities as well as legal officials, and (2) normative proposals concerning the design of legal processes, that is the structure of law as institutional practice.