Economics Dictionary of ArgumentsHome
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| Institutions: Institutions are social structures that organize and guide human behavior. They can be formal or informal, and they can be public or private._____________Annotation: The above characterizations of concepts are neither definitions nor exhausting presentations of problems related to them. Instead, they are intended to give a short introduction to the contributions below. – Lexicon of Arguments. | |||
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Mario J. Rizzo on Institutions - Dictionary of Arguments
Parisi I 274 Decision-making processes/institutions/Rizzo: Rizzo (1980)(1) compares the rule of strict liability with one of negligence from the perspectives of the knowledge required for legal decisions and “institutional” efficiency. He concludes that a strict liability system, with appropriate defenses and excuses, has fewer knowledge requirements than an efficiency-based negligence system. >Liability, >Negligence. The more demanding knowledge requirements of the latter make judicial decision-making more subject to error and to uncertainty from the point of view of individuals making decisions subject to the rules.8 The inability of the negligence system to generate sufficiently precise knowledge increases endogenous legal uncertainty. More generally in the field of public policy, simply to assume that the policymaker, paternalist, or central planner has the relevant knowledge to bring out his stated goals is to assume the knowledge problem away (e.g. Rizzo and Whitman, 2009(2), p. 905). >Paternalism. The task is actually the opposite—to solve the problem of decentralized knowledge. When policymakers act on the basis of a pretense of knowledge to which they have no access, they increase uncertainty relative to attainment of individuals’ goals. Institutions/Rizzo: Legal institutions can facilitate a concurrence of mutual knowledge and expectations completely analogous to the mutual knowledge required for market equilibrium (Kirzner, 1992(3), p. 171). The precise characteristic of these institutions through which they increase predictability is that they create constraints on individuals—not unlike prices in markets. “Nonprice constraints are as much part of decentralized economy as are the prices they help to generate. These constraints are reference frameworks and points, in terms of which actors form expectations. Prices are formed on markets composed of contracts, rules, and customs, which are part of the constraints and basis for observed behavior” (O’Driscoll and Rizzo, 1996(4), p. 106). 1. Rizzo, M. J. (1980). “Law Amid Flux: The Economics of Negligence and Strict Liability in Tort.” Journal of Legal Studies 9: 291–318. 2. Rizzo, M. J., & Whitman, D. G. (2009). Little brother is watching you: New paternalism on the slippery slopes. Arizona Law Review, 51: 685–739. 3. Kirzner, I. M. (1992). The Meaning of Market Process: Essays in the development of modern Austrian economics. New York, Routledge Press. 4. O’Driscoll, G. P. and M. J. Rizzo (1996). The Economics of Time and Ignorance. New York: Routledge Press. Rajagopalan, Shruti and Mario J. Rizzo “Austrian Perspectives on Law and Economics.” In: Parisi, Francesco (ed) (2017). The Oxford Handbook of Law and Economics. Vol 1: Methodology and Concepts. NY: Oxford University._____________Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution. Translations: Dictionary of Arguments The note [Concept/Author], [Author1]Vs[Author2] or [Author]Vs[term] resp. "problem:"/"solution:", "old:"/"new:" and "thesis:" is an addition from the Dictionary of Arguments. If a German edition is specified, the page numbers refer to this edition. |
Rizzo, Mario J. Parisi I Francesco Parisi (Ed) The Oxford Handbook of Law and Economics: Volume 1: Methodology and Concepts New York 2017 |
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