Rational Choice versus Lawful Choice

The legal and the economic perspective on a policy proposal are likely to differ far more fundamentally than is commonly appreciated. Economists will impose certain minimal requirements of rationality on the evaluation process, which lawyers routinely violate. Economists will expect the evaluation process to be coherent in the sense of not exhibiting any intransitivity, not violating the Pareto principle, and not being susceptible to framing effects. Lawyers will routinely run afoul all of these. This paper shows what is at the root of these seeming irrationalities and why they are not so irrational after all. (JEL: A11, K00, K40)