Abstract

MONROY, Daniel Alejandro. Preferences Depend on Reference Point! A Challenge to Law & Economics –and Coasean– Theory. Isonomía [online]. 2020, n.53, pp.70-107.  Epub June 09, 2021. ISSN 1405-0218.

The “coasian” theory of Law and Economic Analysis of Law (L&E), implicitly assume the truthfulness of two behavioral assumptions: the “preference exogeneity” and the “reference independence”. This paper points out some objections to these assumptions, and in this order, the paper shows multiple inconsistencies with regard to: (i) how the L&E –from a positive point of view– predicts individual behavior and the effects of legal rules understood as incentives, and (ii) –from a normative point of view– the way that economic theory recommends the lawmakers decisions. The paper also shows some L&E challenges associated with the behavioral assumption that people value legal rights, not in absolute, but rather in relative terms as compared to some reference point (reference dependence).

Keywords : preferences; law and economics theory; Coase theorem; reference dependence.

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