Article

The End of Contractarianism?

Kent Greenfield

in The Oxford Handbook of Behavioral Economics and the Law

Published in print November 2014 | ISBN: 9780199945474
Published online November 2014 | | DOI: https://dx.doi.org/10.1093/oxfordhb/9780199945474.013.0020

Series: Oxford Handbooks in Economics

The End of Contractarianism?

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For a generation, the law of corporations depended on, and sprang from, a notion of economic rationality. This rationality took as its touchstone the efficiency of the marketplace (especially the securities market) and the predictability of the utility-maximizing behavior of the various actors. But behavioralism continues its victorious expansion throughout the law. Though corporate and securities law was perhaps one of the last bastions in the legal academy of the assumptions of neoclassical economics, it is safe to say that the global financial crisis finally marked the end of the glory days of homo economicus. This chapter will describe some of the ways in which economic rationality affected corporate law doctrine and scholarship during its heyday and will then turn to the behavioral research with implications for corporate governance and securities.

Keywords: corporations; corporate law; securities law; disclosure; groupthink; boards of directors; stakeholder theory; board diversity

Article.  10322 words. 

Subjects: Economics ; Microeconomics ; Industry Studies

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