In this chapter, we examine the evolution of the legal system and the interaction of law and economics. By the end of this chapter, you should be able to discuss how precedent guides and limits the legal system. You will understand how law and economic theory may align to incentivize individuals to make decisions benefiting all of society in cases where narrow self-interest would normally deviate from this path. You will understand limitations of the economic approach to law and that it helps address questions in a more systematic and rational manner than would otherwise be the case.
Key Economic Concepts
externality, positional ...