Physics Breakthrough Disproves Fundamental Assumptions of the Chicago School

Classical law and economics is foundational to the American legal system. Centered at the University of Chicago, with a reach touching nearly every law faculty and economics department in the country, its assumptions, most especially that humans act both rationally and selfishly, informs the thinking of legislatures, judges, and government lawyers, and has shaped nearly every aspect of the way commercial transactions are conducted. Its influence extends from the most transparently commercial enterprises and the how they are regulated to the tort law system and even to criminal law. But what if the Chicago School, as I refer to this line of thinking, is wrong? Many thoughtful scholars have argued that the Chicago School’s assumptions that humans act rationally is incorrect. Alternative approaches such as behavioral law and economics or law and political economy contend that human decision-making is based on emotions or should not be regulated as a “social geometry of bargains.” This Article proposes a different and wholly novel reason that the Chicago School is wrong: a fundamental assumption central to many of its game theory models has been disproven. More specifically, this Article shows that a 2012 breakthrough from world famous physicist Freeman Dyson “shocked the world of game theory.” This game theory breakthrough is now accepted in the fields of mathematics, engineering, and evolutionary biology, but has not made it into mainstream economics, much less law and economics, and no scholar to date has connected it to the Chicago School. This Article builds on this body of work and proves that there are new answers to game theory models that scholars in the Chicago School use as the basis for rationalizing the tort law system as well as the criminal justice system. This Article shows that Chicago School game theorists are wrong on their own terms because these 2 x 2 games such as the Prisoner's Dilemma, Chicken, and Snowdrift—ostensibly based on mutual defection and corrective justice—in fact yield to an insight of pure cooperation. These new game theory solutions can be scaled to design whole institutions and systems that honor the pure cooperation insight, holding out the possibility of cracking large scale social dilemmas like the tragedy of the commons. It demonstrates that, in such systems, pure cooperation is the best answer in the right environment and in the long run. It ends by calling for a new legal field to redesign the structures based on the outdated assumptions of the Chicago School game theorists