Abstract

On a view that emerges from the “law and economics movement,” the purpose of law is to ensure that when individual citizens seek to maximize their individual utility, they will incidentally maximize society’s utility; the law ideally provides individual agents with incentives for efficient behavior. Finkelstein argues that laws that maximize social utility are not necessarily the best legal rules for individuals that seek to maximize their personal utility. In particular, she suggests that ideally rational individuals would be unlikely to select the principle of utility maximization as the basis for choosing ideal legal rules. If Finkelstein is correct, the assumption that human beings are rational utility maximizers would have very different consequences from those that legal economists have identified. Rational actor theory would be more likely to lead us to justify legal rules structured around contractarian principles, i.e., principles of agreement, than around the principle of utility maximization.