General guidelines

Apart from the differences between these various types of analytical ap­proaches, to be discussed shortly, there are six recommendations which should be heeded in any event.

1.

misunderstanding grows out of the assumption that the two coincide, and it is often the task of the economist to show how and why they do not.

2. The economic analysis must be kept pure, in the sense that no additional assumptions not contained in the model must enter. In particular, the theoretical model must be kept separate from the empirical base.

3. The economic analysis of a particular legal rule or decision must not be kept to the confines of that rule; very often, there are consequences going beyond the area to which the rule or decision was meant to apply. These wider consequences may actually be more important than the narrower and intended ones. It is the task of the economic analyst to render as complete a picture as possible.

4. At every step the analysis should be kept empirically open in the sense that empirical knowledge that is or might be available can be systemati­cally introduced.

5. Legal rules and decisions have to be analysed in terms of whose decision making they are able to affect. Economics is a science about decisions taken by agents, and the consequences of legal decision making are the composites of those decisions with respect to rule making. The legal economic analysis can only be institutionally relevant if the deciding actors have been correctly identified.

6. Finally, the economic analyst, in presenting his/her results, needs to keep in mind how much and what information his/her lawyer counterparts are able to digest and work with. A careful process of translating and simpli­fying without falsifying may be necessary.