Economic analysis of law: threshold probability

Abstract

The way in which rules and standards are applied either by the administrative authorities responsible for the enforcement of the various administrative sanctions or by courts, is a determinant contrivance that allows the behavior of individuals to fall within the proviso of legal rules. The main function of Justice, as part of the legal system, is the enforcement and implementation of the law. Unimplemented legal rules have no effect on the social life they intend to regulate, that is, to frame human behavior so as to maximize social welfare. Our ground assumption considers that the behavior of individuals in relation to legal standards is the function of expected costs and benefits of lawful and unlawful alternatives. The highlight of this discussion focuses on the theoretical analysis of the effects of modifications to sanctions provided by law and the probability of their enforcement. The models of unlawful conduct (including criminal behavior) deem that the individual acts rationally on the basis of expected costs and benefits, therefore substantiating the principle of rationality. Under the concept of costs and benefits one can integrate those of material, psychological or moral nature. Theories of crime - more extensively theories of legal offenses - are abundant and are all based on factors of mental, physical, economic and cultural nature among others. Over the last four decades the study of law and economics (also known as the economic analysis of law) has been developed, consisting in applying the methods of economics to law, which are based on the principle of rationality.