A Cognitive Approach to Law and Economics: Hayek’s Legacy

Hayek’s contribution to the analysis of law has been widely criticized and disputed. This paper shares with a recent assessment by Beaulier, Boettke and Coyne the opinion that the significance of Hayek’s legal writings and their relevance to law and economics can only be completely understood by jointly analyzing his economic theory and his legal theory. Moreover it will be argued that both theories must be reconsidered in light of Hayek’s theory of mind. This theory, in fact, represents the key element in understanding Hayek’s thought in that it gives insight into the complexity of the cognitive and psychological determinants involved in coordination processes. The latter are the main phenomena that Hayek studied, and they are also essential for understanding the emergence of customs and social institutions as described in his legal theory. From this perspective, Hayek’s legal theory is of close relevance to current research in law. His contribution suggests a different methodological approach to developing legal theory in which the analysis of the micro-foundations of human behavior is of central importance. The paper argues that inquiry of this kind can contribute to legal theory by explaining perception in decision-making processes, and it may be the first essential step toward a normative legal theory that reduces errors in legal contexts like the one currently being sought by behavioral law and economics scholars.