Efficient Norms

Abstract

A great deal of behaviour is maintained by social norms and non-legal sanctions, rather than by legal rules and sanctions. Such norm-governed behaviour raises many important legal issues. Should courts determine negligence by using a cost-benefit standard like the Hand test or by evaluating the conduct against social norms? Should courts fill gaps in contracts by trying to divine the intentions of the parties or by assuming conformity to business norms? One cannot answer these questions without understanding how norms function and whether they provide efficient standards of behaviour.