The Elgar Companion to Law and Economics
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The Elgar Companion to Law and Economics

Edited by Jürgen G. Backhaus

This authoritative and comprehensive reference work introduces the reader to the major concepts and leading contributors in the field of law and economics. The Companion features accessible, informative and provocative entries on all the significant areas and breaks new ground by bringing together widely dispersed but theoretically congruent ideas for the first time.
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Chapter 18: General norms and customs

Jean-Michel Josselin and Alain Marciano


Jean-Michel Josselin and Alain Marciano Economics interactions between individuals take place within institutions which can be defined either as informal constraints (sanctions, customs, taboos, traditions and codes of conduct) or as formal rules (constitutions, law, property rights) (North, 1991). Social norms or general norms can be defined as the broader set of rules including informal constraints and formal rules as well. More precisely, rules can be defined as ‘the basic environment in which a game between actors take place’ (Frey, 1990, p. 444). Therefore the set of general norms can be delineated by the nature of agreements among individuals. A basic distinction is thus possible between conventions which are tacit rules and institutions which solely result from an explicit and formal agreement among individuals. Customs belong to the first sub-set of general social norms, namely those defined as informal and tacitly agreed rules. In order to understand how customs are linked to general norms, we must investigate the conditions under which they tend to be generalized into social norms. The first question to point out concerns the rationale for customary rules as such and for obedience to them. Why should individuals follow customary rules? Economists should be puzzled by observing individuals following a set of a priori defined rules, since methodological individualism explains individual choices as discrete and sequential. As will be seen below, using customs as a guideline for actions suggests that some of the benefits are not strictly monetary gains, but are more broadly organizational. Secondly, from the...

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