Berkeley Program in Law and Economics

Economics, which has greatly advanced deterrence theory, has made no contribution to understanding how law changes peoples’ values. I combine economics and psychology to offer the framework for such a theory. Rational self-development involves treating yourself as the means to achieve your ends. Pursing ends changes objective opportunities and subjective values. The theory of cognitive dissonance predicts how changing opportunities changes values. If the connection between opportunities and values is strong enough, one choice may dominant the alternatives. A dominant choice is preferred when evaluated by using any likely values. I call a choice that is better with respect to the likely values of a decision-maker a “Pareto self-improvement.” By creating opportunities for Pareto self-improvement, law changes peoples’ values. Law’s ability to change behavior by changing values, however, occurs slowly, whereas law changes behavior quickly by other means such as deterrence.