Law and Decision Making: Incorporating Internal Harm Into Rational Choice Theory

One does not have to experience driving in peak-hour traffic in New Delhi for very long to realize that not all drivers obey traffic laws or rules of tort law. Indeed, in that city at least, those who do appear to be the exception rather than the rule. A road sign that reads “Wearing a helmet could save your life. Law or not”, suggests that motorcycle riders require some additional reason for action beyond the law. This raises important questions. Why is the fact that a law is a law not enough to dictate certain behavior for its subjects? How does a legal rule influence an agent’s behavior? In other words, when an agent decides whether or not to engage in behavior that may or would impose criminal or tortious liability, to what extent does that law influence the decision? Through the imposition of liability, law demands certain behavior; it creates an obligation. But the obligation of a law is not sufficient to accurately predict an agent’s response to it. Laws are often broken. As well as breaking traffic rules, some people murder, or negligently put others at risk, or do not pay taxes. What then explains responses to legal rules? This article endeavors to delineate an explanatory theory of behavior in response to legal rules, as distinct from a normative or predictive theory. The theory modifies the standard rational choice account by treating two distinct causes of internal harm as affecting an agent’s well-being. An agent will have a limited set of possible choices that can be made. There is also a set of potential outcomes that may arise from each of the possible decisions. The agent will have certain beliefs as to the likelihood of each of those outcomes being realized as a result of a given decision. The agent will also have preferences over each of the potential outcomes. (1) Thus, in order to effect a decision, a law must either:

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