Mixed Signals: Rational-Choice Theories of Social Norms and the Pragmatics of Explanation
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Indiana Law Journal Volume 77 Issue 1 Article 1 Winter 2002 Mixed Signals: Rational-Choice Theories of Social Norms and the Pragmatics of Explanation W. Bradley Wendel Washington and Lee University School of Law Follow this and additional works at: https://www.repository.law.indiana.edu/ilj Part of the Law and Society Commons Recommended Citation Wendel, W. Bradley (2002) "Mixed Signals: Rational-Choice Theories of Social Norms and the Pragmatics of Explanation," Indiana Law Journal: Vol. 77 : Iss. 1 , Article 1. Available at: https://www.repository.law.indiana.edu/ilj/vol77/iss1/1 This Article is brought to you for free and open access by the Law School Journals at Digital Repository @ Maurer Law. It has been accepted for inclusion in Indiana Law Journal by an authorized editor of Digital Repository @ Maurer Law. For more information, please contact [email protected]. Mixed Signals: Rational-Choice Theories of Social Norms and the Pragmatics of Explanation W. BRADLEY WENDEL! TABLE OF CONTENTS I. INTRODUCTION ............................................... 2 II. THE "PROBLEM" OF SOCIALNORMS ............................... 8 III. "To SEEM RATHER THAN To BE": RATIONAL-CHOICE MODELS OF SOCIAL NORMS ..................... 12 A. Eclecticism- Elster ....................................... 12 B. Sanctioning-McAdams .................................. 14 C. Signaling-Posner ....................................... 19 IV. "THE CROOKED TIMBER OF HUMANITY": INTERNAL CRITIQUES ......................................... 26 A. The Normativity of Norms .................................. 26 B. TransactionCosts-Observability, Diversity, and Ambiguity ...... 31 C. Psychological Considerations- Intentionalityand Disposition ............................... 36 V. "ADVANCED CAT MusIc": EXTERNAL CRITIQUES ................... 39 A. What Is Involved In Providingan Explanation? ................. 41 B. The Appeal of Economic Models ............................ 49 1. The Ideal of Freedom and the Rejection of Authority .......... 49 2. Science Envy and Value Neutrality ....................... 51 VI. "SHADOWS OR THE FURNITURE ITSELF": ARBITRATING THE DISPUTE ..................................... 56 [C]ertain ideas burst upon the intellectual landscape with tremendous force. They resolve so many fundamental problems at once that they seem also to promise that they will resolve all fundamental problems, clarify all obscure issues.... After we have become familiar with the new idea, however, after it has become part of our general stock of theoretical concepts, our expectations * Assistant Professor, Washington and Lee University School of Law. the generous support of the Francis Lewis Law Center, Washington and Lee University, and Dean David Partlett, is gratefully acknowledged. A preliminary version of this paper was presented as a seminar in the philosophy department at Washington and Lee University; I am grateful to the faculty and student participants for their spirited questioning. I also appreciate the suggestions provided by the participants in a faculty workshop at Washington and Lee Law School. A subsequent version was presented at the international conference of the Law and Society Association, "Law in Action," in Budapest, Hungary, July 4-7, 2001. Special thanks to Greg Cooper, Quince Hopkins, Peter Huang, Lyman Johnson, Ron Krotoszynski, James Mahon, David Millon, Lad Sessions, and Jack Wilson for their insightful comments. INDIANA LA WJOURNAL [Vol. 77:1 are brought more into balance with its actual uses, and its excessive popularity is ended. A few zealots persist in the old key-to-the-universe view of it; but less driven thinkers settle down after a while to the problems the idea has really generated. They try to apply it and extend it where it applies and where it is capable of extension; and they desist where it does not apply or cannot be extended ....[I]t still explains something; and our attention shifts to isolating just what that something is .... I. INTRODUCTION The question of how societies secure cooperation and order in the absence of state enforced sanctions has long vexed law and economics scholars. Recently the concept of social norms-informally enforced rules of behavior-has occupied the attention of a large number of these theorists, who are concerned with understanding why economically rational actors would bother to follow rules whose costs seem to outweigh their benefits. Because of the prestige (or at least trendiness) of law and economics, it seems that now everyone in the legal academy is talking about social norms. Four symposia published in major law reviews have been devoted specifically to the economic analysis of social norms or the application of this analysis to particular settings,2 to say nothing of the proliferation of books and independent articles on the same subject, some of which have already become quite influential.3 This burgeoning scholarship is closely related to a wider concern in law and economics, namely the attempt to develop a "behavioral" law and economics that integrates into economic models some of the findings from empirical social science 1. CLIFFORD GEERTZ, THE INTERPRETATION OF CULTURES 3-4 (1973). 2. Symposium, Law, Economics, and Norms, 144 U. PA. L. REV. 1643 (1996); Symposium, The Legal Construction of Norms, 86 VA. L. REV. 1577 (2000); Symposium, Norms and CorporateLaw,149 U. PA. L. REV. 1607 (2001); Symposium, SocialNorms,Social Meaning, and the Economic Analysis of Law, 27 .. LEGAL STUD. 537 (1998). In addition, an issue of the Wisconsin Law Review dedicated to achieving some kind of rapprochement between the law and economics and law and society movements contained many articles alluding to the economic analysis of social norms. See Symposium, Law and Society & Law and Economics: Common Ground,Irreconcilable Differences, New Directions, 1997 WIS. L. REV. 375. 3. See DENNIS CHONG, RATIONAL LIVES: NORMS AND VALUES INPOLITICS AND SOCIETY (2000); ROBERT C. ELLICKSON, ORDER WITHOUT LAW: How NEIGHBORS SETTLE DISPUTES (1991) [hereinafter ELLICKSON, ORDER WITHOUT LAW]; RUSSELLHARDIN, ONE FORALL: THE LOGIC OFGROUPCONFLICT (1995); Lisa Bernstein, OptingOut ofthe Legal System: Extralegal ContractualRelationsin the DiamondIndustry,21 J. LEGALSTUD. 115 (1992); David Charny, Nonlegal Sanctions in Commercial Relationships, 104 HARV. L. REV. 373 (1990); Robert D. Cooter, Models ofMoralityin Law andEconomics: Self-Control and Self-Improvementfor the "Bad Man" ofHolmes, 78 B.U. L. REV. 903 (1998); Robert C. Ellickson, ControllingChronic Misconduct in City Spaces: OfPanhandlers,Skid Rows, and Public-SpaceZoning, 105 YALE L.J. 1165 (1996); Lawrence Lessig, The Regulation of Social Meaning, 62 U. CH. L. REV. 943 (1995); Richard H. McAdams, The Origin, Development, and Regulation ofNorms, 96 MICH. L. REV. 338 (1997) [hereinafter McAdams, Origin];Cass R. Sunstein, SocialNormsandSocial Roles, 96 COLUM. L. REv. 903 (1996). 2002] MIXED SIGNALS research.4 Behavioral analysis attempts to account for standard objections often raised to law and economics, such as the imperfect rationality of fallible human beings and the importance of considerations that cannot be reduced to self-interest--for example loyalty, solidarity, community, altruism, and other moral values. Althoughbehavioral law and economics and the economic analysis of social norms address the problem from different directions, they are both concerned with the same jurisprudential issue, namely how a theory of human behavior ought to be developed that is relevant to the design of legal institutions. The attempt by law and economics to account for social norms has sparked yet another round of an ongoing battle, between that group of theorists and critics from various other disciplines. Social scientists, members of the loosely defined law and society movement, legal theorists (generally identifying themselves as progressive or critical), moral and political philosophers, and even some scholars generally sympathetic to rational-choice approaches have long objected to the reductionist tendencies of law and economics.' The economic mode of analysis has an almost pathological aversion to explanations that appeal to values, commitments, loyalties, relationships, or emotions. Indeed, one of its principal exponents, Richard Posner, recently excoriated moral philosophers for suggesting that moral values are relevant 4. See, e.g., BEHAVIORAL LAW AND ECONOMICS (Cass R. Sunstein ed., 2000); DONALD P. GREEN & IAN SHAPIRO, PATHOLOGIES OF RATIONAL CHOICE THEORY (1994); RICHARD H. THALER, THE WINNER'S CURSE: PARADOXES AND ANOMALIES OF ECONOMIC LIFE (1992); Russell B. Korobkin & Thomas S. Ulen, Law and Behavioral Science: Removing the RationalityAssumptionfrom Law and Economics, 88 CAL. L. REV. 1051 (2000); Symposium, The Legal ImplicationsofPsychology: Human Behavior,Beha ,ioralEconomics, and the Law, 51 VAND. L. REV. 1495 (1998); Thomas S. Ulen, Rational Choice andthe EconomicAnalysis ofLaw, 19 LkW & SOC. INQUIRY 487 (1994). 5. For important contributions to the extensive critical literature, which varies in the degree of its sympathy with rational-choice theory, see, for example, ELIZABETH ANDERSON, VALUE IN ETHICS AND ECONOMICS (1993); JULES L. COLEMAN, MARKETS, MORALS AND THE LAW (1988); RONALD DWORKIN, Is Wealth a Value?, in A MATTER OFPRNCPLE 237 (1985); MARK KELMAN, A GUIDE TO CRITICAL LEGAL STUDIES 110, 114-50 (1987); C. Edwin Baker, The Ideology of the Economic Analysis of Law, 5 PHIL. & PUB. AFF. (1975); Jane B. Baron & Jeffrey L. Dunoff, AgainstMarket