ECON 367 Lecture Notes - Lecture 5: Social Welfare Function, Consumer Protection, Unintended Consequences
Document Summary
Efficiency trumps distribution: premise, private law should create incentives for future behaviour, thus, private law should be concerned with efficiency, not be concerned with distributional goals and social justice, problems using the law for distributional goals a. Incentive distortions - using the legal system to redistribute messes with the mkt: social welfare function = w - requires an antecedent determination of societal values. Like an indifference curve i. ii: mathematical equivalent of the constitution iv. v. vi. The point here is, one must assume the form of the swf ii. Chicago school: law tends to efficiency: common law is unified by an underlying logic, there is autonomous legal thought organized around the doctrine of efficiency, 3 arguments supporting the concept that the law tends towards efficiency a. Common law institutions are designed to foster consensus: Expected utility maximization model: how does settling work in cases: cost of judgement: is and p of.
