In the tradition of the Chicago School of law and economics, Posner (Law/Univ. of Chicago) offers an insightful study of the relationship between legal regulation and social norms.
Game theory has transformed the study of market behavior, but it has had little impact as yet on legal theory. Posner starts by observing that most forms of collective behavior occur independently of legal rules: indeed, without a system of law, people would still engage in cooperative and selfish behaviors. Posner uses game theory and empirical studies to establish a model of nonlegal collective behavior, arguing that much social interaction consists of a kind of “signaling game,” in which people convey their willingness to conform to social norms and demonstrate their desirability as potential partners in social enterprises. According to Posner, people will conform to such norms (and may even suppress individual preferences or cheating behavior) as rational decisions made in order to receive long-term benefits (economic and otherwise), independent of any consideration of legal incentives. With mixed success, the author then examines the usefulness of this model for an understanding of particular issues in contracts and commercial law, torts, criminal law, and politics. For instance, Posner attempts to use the signaling model to explain why courts enforce commercial contracts but not gratuitous promises (he speculates, with no historical evidence, that this doctrine developed when common law courts deferred to “nonlegal mechanisms” on promise enforcement) and why shaming punishments don’t work (they may become badges of merit in communities that mistrust the government). Finally, Posner critically examines the relationship between social norms and policymaking (especially government attempts to change social norms). Posner argues that law can often be understood as an attempt to use social norms, and he discerns a gradual trend toward displacement of nonlegal by legal regulation (which, he contends, “should not be deplored, as is currently fashionable, but celebrated”).
A stimulating application of game theory to law, equally valuable for social scientists and those interested in legal theory.