1 Ellickson, Robert C., “Of Coase and Cattle,” 38 Stan. L. Rev. 623 (1986).CrossRefGoogle Scholar

2 At least one other law and economics scholar has ventured into the field. See Cooter, Robert D., “Inventing Market Property: The Land Courts of Papua New Guinea,” 25 Law & Soc'y Rev. 759 (1991). Cooter surveyed the transition from customary, clan-based landholding in Papua New Guinea to formal real estate transactions. While Cooter uses some of the same models to describe customary social interactions (e.g., game theory “evolution of cooperation”), his study focuses on a feature not present in Ellickson's book: the response of custom and formal law to changing conditions, in his case, the growing industrialization of the land-based economy. See id. at 783 n.62 (“tit-for-tat” model; custom is efficient); at 788 (“Perhaps my most important general finding in studying the land courts is that custom lives and adapts to novel situations”). Ellickson, by contrast, studies a mostly static set of economic phenomena. In a more recent article, however, he does suggest that the efficiency criterion can explain how close-knit groups respond to dynamics. See Ellickson, Robert, “Property in Land,”—Yale L.J. 13—, 1397 (19—) (“The central positive thesis of this Article is that a close-knit group tries to create, through custom and law, a cost-minimizing land regime that adaptively responds to changes in risk, technology, demand, and other economic conditions”).CrossRefGoogle Scholar

3 That is, the total economic value of their joint output, measured in dollars in Coase's examples.Google Scholar

4 That is, assigning liability to one party or the other may affect how much of each good or service is produced; it just will not affect the total value of all goods and services produced. Others following Coase have argued that there will be distributional effects from different allocations of rights. “Of course, the initial allocation of rights always matters from the perspective of income distribution. To illustrate, if efficiency requires the railroad to be free from an injunction, granting the farmers the right to be free from injunctive relief will motivate the railroad to try to buy this right. The purchase is a cost to the railroad and income to the farmers. Conversely, granting impunity to the railroad will save it the cost of purchasing the right and deprive farmers of the income from selling it.” Robert D. Cooter, “The Coase Theorem,” in The New Palgrave: Allocation, Information, and Muskets 64, 67 (New York: Norton, 1987). Coase himself denies this, however. Ronald H. Coase, “Notes on the Problem of Social Cost,” in John Eatwell, Murray Milgate, & Peter Newrnan, eds., The Firm, the Market, and the Law 157, 172 (Chicago: University of Chicago Press, 1988) (“Coase, ‘Notes’”) (arguing that assignment of legal right will be reflected in the relative costs of farm land and railroading, and therefore the parties will wind up with the same distribution of resources in either case).Google Scholar

5 See Coase, “Notes” at 174 (“The world of zero transaction costs has often been described as a Coasian world. Nothing could be further from the truth. It is the world of modern economic theory, one which I was hoping to persuade economists to leave”).Google Scholar

6 Especially where close-knit groups—the ones of interest to Ellickson—are involved. An exception, of course, is where law comes to reflect community practices, in which case it is arguably redundant. Cf. Richard M. Brown, No Duty to Retreat (New York: Oxford University Press, 1991) (discussing American law and custom of right to defend the home from intruders).Google Scholar

7 Cf. Engel, David M., “The Oven Bird's Song: Insiders, Outsiders, and Personal Injuries in an American Community,” 18 Law & Soc'y Rev. 551 (1984) (residents of small Illinois town believe litigation is bad and so settle everything without recourse to formal legal apparatus).CrossRefGoogle Scholar

8 This theme is an old one in sociology, and it has found new adherents recently in law as well. See Moore, Sally Falk, “Law and Social Change: The Semi-autonomous Social Field as an Appropriate Subject of Study,” 7 Law & Soc'y Rev. 719 (1973); Landa, Janet T., “A Theory of the Ethnically Homogenous Middleman Group: An Institutional Alternative to Contract Law,” 10 J. Legal Stud. 349 (1981); Lisa Bernstein, “Opting out of the Legal System: Extralegal Contractual Relations in the Diamond Industry,” 21 J. Legal Stud. 115 (1992); Douglas W. Allen & Dean Lueck, “The ‘Back Forty’ on a Handshake: Specific Assets, Reputation, and the Structure of Farmland Contracts,” 8 J.L. Econ. & Org. 366 (1992). Cf. Jerold S. Auerbach, Justice without Law? (New York: Oxford University Press, 1983) (documenting evolution of informal control mechanisms and attempts by lawyers to undermine or appropriate them). See generally Richard Swedberg, Economics and Sociology (Princeton, N.J.: Princeton University Press, 1990) (“Swedberg, Economics and Sociology”) (collecting interviews with scholars working at the increasingly fruitful intersection of these two fields).CrossRefGoogle Scholar

9 Cooter, Robert D., “The Cost of Coase,” 11 J. Legal Stud. 1, 23 (1982): “The error in the bargaining version of the Coase Theorem is to suppose that the obstacle to cooperation is the cost of communicating, rather than the strategic nature of the situation. Bargainers remain uncertain about what their opponents will do, not because it costs too much to broadcast one's intentions, but because strategy requires that true intentions be disguised.”.CrossRefGoogle Scholar

10 See note 5 supra.Google Scholar

11 For an example of this, contrast two common social practices in the context of restaurant meals: paying tips and splitting checks. Many people follow a common procedure for calculating tips; they take 10% of the meal price, which is easy to calculate, then they add 5wo to this amount, easily done by adding half again the original 10% amount. The result is a 15% tip, calculated according to a well-known and widely used procedure. Splitting dinner checks, on the other hand, is a different matter. Although in many cases two or more people who share a meal attempt to divide up the dinner check to reflect the actual cost of the food eaten by each, in many other cases they follow a different rule, usually either (1) one person pays all, or (2) each pays the same amount, regardless of their actual meal (i.e., they divide the total check by the number in the party). Significantly, in my experience at least there is no strong correlation between the complexity of the calculation or the number of people in the party and the frequency with which the diners attempt to divide up the check according to what each one actually ate. Even when the calculation is relatively simple, in other words, precise apportionment of costs is sometimes eschewed. It is not therefore a simple matter of information costs. There is more going on, something in the nature of a social convention governing the various dining situations. At the same time, one can imagine a relatively simple rule that might be applied in such situations; say, splitting the total cost according to such easily observed features of each diner's meal as how many courses each had or the like. Alternatively, one can imagine a simple rule whereby the total check is divided in half, and then 20% of the total is added to one half and the one or two or three largest eaters (agreed on by consensus) would then pay that larger “half.” The point here is that these imaginary rules, and others like them, if as well known and widely used as the tip rule, could make the procedure for dinner check splitting just as routine as the calculation of a tip. It is arguable at least that there is no iron physical law, or logical principle, that explains the differences between social norms that we observe in the two situations. In other words, it is at least possible that the low information cost does nor dictate, but in fact follow from, the social norm. A recent dinner with friends from a country where dinner patrons do not tip sup ports the point; they were surprised that I could calculate the 15% tip almost without thought, until I told them about the common procedure described above.Google Scholar

12 See, e.g., Douglas North, Structure and Change in Economic History (New York: Norton, 1981). The picture presented in this book has been filled out to some extent in subsequent work; see Douglas C. North, Institutions, Institutional Change and Economic Performance (New York: Cambridge University Press, 1990) (arguing that institutional features, most important their impact on transaction costs, explain differential rates of development). Cf. G. Shibata, D. Tse, I. Virtinsky, & D. Wehrung, “DO Norms of Decision-Making Affect Performance of Japanese Firms? An Exploratory Study of Medium and Large Firms,” 12 Mgmt. & Decision Econ. 135, 144 (1991) (finding positive relationship between management style that fosters trust and economic performance).CrossRefGoogle Scholar

13 See, e.g., Steven J. Brams, Biblical Games: A Strategic Analysis of Stories in the Old Testament (Cambridge, Mass.: MIT Press, 1980); id, Superior Beings—If They Exist, How Would We Know? Game-theoretic Implications of Omniscience, Omnipotence, Immortality, and Incomprehensibility (New York: Springer-Verlag, 1983).Google Scholar

14 See, e.g., Donald Black, The Behavior of Law (New York: Academic Press, 1976), whose concept of “social distance” is closely related to Ellickson's taxonomy of social control.Google Scholar

15 The legal centrism tradition, says Ellickson, can be traced to Hobbes (at 138). Then Calabresi and Melamed identified “the state” as the sole source of rights to be exchanged (at 139). More recently, law and economics scholars such as Stigler, Polinsky, Priest, and Shavell have assumed complete knowledge of the law—another form of “legal centrism,” according to Ellickson (at 140).Google Scholar

16 Merges, Robert P. & Nelson, Richard R., “On the Complex Economics of Patent Scope,” 90 Colum. L. Rev. 839, 860–62 (1990).CrossRefGoogle Scholar

17 This may strike some as a rather positivistic definition of a norm—as opposed, say, to one where norms are defined as deep-seated beliefs, attitudes, etc., that cause observable behaviors. Whatever one calls these observed behavioral patterns, they are what Ellickson set out to explain.Google Scholar

18 Ellickson also expresses “agnosticism” about norms of pure charity, saying they are outside the scope of his hypothesis of wealth maximization. Indeed, he also states the flip side of this: that he assumes no distributive concerns infect the content of the norms he examines (at 177).Google Scholar

19 Allan Horwitz, The Logic of Social Control 49 (New York: Plenum Press, 1990) (“Horwitz, Social Control”) (different societies define “cornpensable” wrongs differently; some hold that murder is compensable, others say it threatens a “core value” and requires a more severe punishment).Google Scholar

20 Under this argument, as in the earlier footnote discussing social norms on tipping and dinner checks, the reluctance to pay one's neighbor the going labor rate for fence-repair work is an outgrowth of norms regarding what it means to be a neighbor, rather than of the difficulty of valuing labor. If this norm made such valuations unusual, such unfamiliarity would of course contribute to the cost of the calculation. But the costliness of the calculation would follow from, and not be the cause of, the norm. Note that since presumably most ranchers hire day labor at one time or another, they know the going rate or can easily find out. This at least eliminates one cost in ascertaining a reasonable labor rate for fence repair between neighbors.Google Scholar

21 For those who have somehow avoided this business up until now: The following matrix captures the Prisoner's Dilemma. The point is that under the circumstances specified, the parties would both be better off if they cooperated, but because they are each worse off if they cooperate and the other doesn't, they won't—they will defect instead (the scenario explained below). This is captured arithmetically by the payoffs in the matrix. The figures in the upper left-hand corner (“3/3”) represent the net gain to each from cooperating (i.e., $3 each). The figures in the lower right-hand corner illustrate the gain to each if they both don't cooperate, i.e., they both defect ($1 each). The other two corners of the matrix represent the payoffs when one party cooperates and the other defects. In the upper right corner, A cooperates but & does not. The lower left corner represents the opposite situation. Party B. Cooperates Defects. Party A. Cooperates 3/3 0/5. Defects 3/3 1/1. (x/y) = (payoff to Party A/payoff to Party B). Without knowing in advance which strategy the other party will choose, it is only safe to defect—because of the risk you will get “burned” by cooperating while the other party defects. The classic example of a payoff structure like this is the case of the two criminal suspects captured and placed in different cells. Cooperating means refusing to confess to the crime (which is great if the other party/prisoner also chooses this, and awful if she chooses to confess; you are punished extra, in this game, for not confessing). Defecting means confessing to the crime. The payoffs may be thought of as the value of various punishments, e.g., 5 is that you go free, 3 is a short jail term, 1 is a fairly long jail term, and 0 is a very long jail term. You can see that, taken together, the best outcome for the two prisoners would be 3/3, which is the payoff if they both cooperate (i.e., do not confess). But since cooperating while your counterpart defects is disastrous, it is safer (i.e., gains you more regardless of what the other prisoner does) to defect (i.e., confess).Google Scholar

22 Robert Axelrod, The Evolution of Cooperation (New York: Basic Books, 1984).Google Scholar

23 See Guido Calabresi, The Costs of Accidents (New Haven, Conn.: Yale University Press, 1970).Google Scholar

24 See Clayton Gillette, “Game Theory and Local Government Law” (working paper presented at Boston University Law School faculty workshop, April 1992).Google Scholar

25 See Peter P. Ekeh, Social Exchange Theory: The Two Traditions 21, 43 (Cambridge, Mass.: Harvard University Press, 1974).Google Scholar

26 Quoted in Claude Levi-Strauss, The Elementary Structures of Kinship 138 (Boston: Beacon Press, 1969).Google Scholar

27 London: Routledge & Kegan Paul, 1922.Google Scholar

28 Id. at 175. See also Christopher Healey, Maring Hunters and Traders: Production and Exchange in the Papua New Guinea Highlands (Berkeley: University of California Press, 1990) (trade in bird feathers used to symbolically constitute social relations).Google Scholar

29 Marcel Mauss, The Gift: From and Functions of Exchange in Archaic Societies, trans. Ian Cunnison (New York: Norton, 1967).Google Scholar

30 Mauss himself (id at 11), however, appeared to have rather complicated view of exchange, describing it as contributing to a “spiritual bond” or basic moral framework that holds society together.Google Scholar

31 See, e.g., at 78, where Ellickson compares the norms governing fence-repair reimbursement with those applied to sharing the costs of dinner among friends. Recall, however, that Ellickson expressly excludes pure gift giving from his analysis (see at 176–77).Google Scholar

32 I have been told that this tradition is well represented in Randall Collins, Theoretical Sociology (New York: Harcourt, 1988).Google Scholar

33 This is in keeping with his own advice on these matters. See Ellickson, Robert C., “Bringing Culture and Human Frailty to Rational Actors: A Critique of Classical Law and Economics,” 65 Chi.-Kent L. Rev. 23 (1989).Google Scholar

34 Tom R. Burns, “Models of Social and Market Exchange: Toward a Sociological Theory of Games and Social Behavior,” in Craig Calhoun, Marshall W. Meyer, & W. Richard Scott, eds., Structures of Power and Constraint: Papers in Honor of Peter M. Blau 129, 134–35 (Cambridge: Cambridge University Press, 1990).Google Scholar

35 Id. at 137. Note that one could infer that, in the long run, accounts will eventually be squared, and that the way to square these observations with Ellickson's hypothesis is to extend the time frame of the “game,” perhaps even intergenerationally. But note how this takes on the appearance of circularity: we assume the actors are rational, and keep looking until our assumption is borne out.Google Scholar

36 Many others have done so. See, e.g., Cooter, , 25 Law & Soc'y Rev. 783 n.62 (cited in note 2) (tit-for-tat, sometimes escalating to violence, is usual form of dispute resolution/cooperation among native people of Papa New Guinea).Google Scholar

37 It should be noted that on one account, these seemingly nonrationally motivated acts have a rational basis: they label those who perform them as “good risks” for inclusion in future transactions with others. See Frank, Robert H., “Melding Sociology and Economics: James Coleman's Foundations of Social Theory,” 30 J. Econ Lit. 147 (1992). Coleman's views, incidentally, are quite consonant with Ellickson's, which shows that at least some sociologists share Ellickson's “strong rationality” view of social interactions. See Swedberg, , Economics and Sociology (cited in note 8). In fact, there is a rich body of contemporary scholarship emphasizing the limits of strong rationality views of norms and institutions. See, e.g., Koford, Kenneth J. & Miller, Jeffrey B., eds., Social Norms and Economic Institutions (Ann Arbor: University of Michigan Press, 1991); Zukin, Sharon & DiMaggio, Paul, eds., Structure of Capital: The Social Organization of the Economy (Cambridge: Cambridge University Press, 1990).Google Scholar

38 To be fair, Ellickson, does consider two pieces of “counterevidence”—field research that purports to show some very amoral, greedy and selfish behavior among peasants in southern Italy and native peoples in Uganda (at 268). But the examples are drawn from attempts to refute “functionalist” theories in sociology, and so are directed at a slightly different target. On this debate over functionalism, see Elster, Jon, “Social Norms and Economic Theory,” 3 J. Econ. Perspectives 99 (1989).Google Scholar

39 Horwitz, Social Control 129, 131 (cited in note 19) (“vengeful self help… proliferates in settings that lack legitimate state authority. For example, in peasant areas of southern Italy no neutral third parties are present to resolve disputes”).Google Scholar