Law and Economics
Main assumption:
People are
rational actors who seek to maximize their material self-interest (wealth-maximization).
Positive claim of law and economics:
The common law is
efficient.
(There are several definitions of efficiency including: Pareto efficiency and Kaldor-Hicks efficiency.)
Normative claim of law and economics:
Law should be efficient.
Criticisms of the law and economics approach:
1) People do not always behave rationally.
2) Wealth is a crude measure of the things people really care about (utility is not necessarily measured by wealth) and so may not reflect what our laws should emphasize.
3) Wealth-maximization is amoral.
4) Some of the things that people would be willing to pay for are illegitimate (commodification of things that should not be commodified).