Law, Economics and Evolutionary Theory
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Law, Economics and Evolutionary Theory

Edited by Peer Zumbansen and Gralf-Peter Calliess

Law and economics has arguably become one of the most influential theories in contemporary legal theory and adjudication. The essays in this volume, authored by both legal scholars and economists, constitute lively and critical engagements between law and economics and new institutional economics from the perspectives of legal and evolutionary theory. The result is a fresh look at core concepts in law and economics – such as ‘institutions’, ‘institutional change’ and ‘market failure‘ – that offer new perspectives on the relationship between economic and legal governance.
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Chapter 7: The Expressive Power of Adjudication in an Evolutionary Context

Richard H. McAdams


Richard H. McAdams This chapter offers a ‘third way’ of understanding compliance with adjudication. The two conventional theories are economic – that people fear threatened sanctions – and sociological – that people defer to perceived legitimacy. Without denying the importance of these mechanisms, I offer to supplement them with a new causal story for the effect of adjudication. To explain how courts influence behavior independent of their perceived legitimacy and the sanctions they wield, one must engage in a peculiar thought experiment imagining a court without these two typical characteristics. I therefore devote much of the chapter to describing an expressive influence that any third party might have over two parties in a dispute. The expressive theory of adjudication synergistically combines three ways that economics has of understanding communicative influences: (1) as a device for creating a ‘correlated equilibrium;’ (2) as a ‘cheap talk’ means of constructing a ‘focal point’ around which individuals coordinate; and (3) as a signal of private information. The synergy of these three forces gives the third party an expressive power to resolve the specific disputes subject to adjudication. After discussing dispute resolution, I turn more clearly to a discussion of adjudication – to the ability of courts or quasi-judicial bodies to influence the behavior of those not a party to the dispute that prompts its decision. This part of the story requires an evolutionary approach. I discuss how informal order – conventions and norms – inherently contain ambiguity that the adjudicator can resolve expressively. The adjudicator’s clarification of the convention...

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