This is the second of a two part lecture series under the banner of ‘Normativity and Rationality in Economic Analysis of
Law: Two Critiques’. Information on the first talk can be found here: talks.ox.ac.uk/talks/id/ae55ecd1-7b99-4980-ad49-19aeb3511c27

This lecture will contrast the account of rational interaction that is provided by the legal
theorist in the law with that provided by the economist within game theory. Game theory
accounts for how rational agents interact in strategic situations. The situations are
strategic in that rational conduct for any one agent is determined by what that agent
believes another rational agent in the interaction might do. In non-cooperative game theory
this thinking, while obviously sophisticated, and having as its subject matter the thoughts
and actions of another, remains very private. Each agent typically works out what to do, or
how to interact with another, as a matter of private individual rationality. However,
strategic rationality is not the only way to think about how rationality and reasoning might
govern individual choices in cases of social interaction. An alternative form of reasoning is
one that is exemplified in the law’s idea of an objectively or publicly reasonable
interaction. While conceding that choices are ultimately made by individuals, public
reasonableness does not assess the rationality of these individual actions directly, but
rather derives their rationality from a prior assessment of the (possibly non-instrumental)
rationality of a pattern or category of actions for the group of individuals taken as a whole.
In other words, the rationality of a part – some individual action – is derived from the
rationality of the larger conceptual whole of which it is a part. The action of the individual
agent is rational, therefore, as an instantiation of a category of actions that is rational or,
better, reasonable overall. My presentation will show how this alternative legal
understanding of rational social interactions under the idea of public reasonableness can
better explain than conventional game theory how individuals coordinate across multiple
Nash equilibria in pure coordination games or in coordination games where there might be
some conflict of interest. More adventuresomely, but in a way consistent with what we
observe, public reasonableness might also be used to explain why individual agents might
choose to coordinate or cooperate around non-Nash equilibria – something that challenges
game theory as an account of rational social interactions at a very fundamental level
indeed.

Professor Bruce Chapman is a Professor of Law at the Faculty of Law, University of
Toronto. Originally trained as an economist at Cambridge University before doing law at
the University of Toronto, he continues to be interested in how theories of rational and
normative decision-making vary across different academic disciplines.

The lectures are funded by a generous benefaction from Professor Oliver Smithies, which
enables Balliol to bring distinguished visitors to the University of Oxford.

This is the second of two lectures, the first can be found here: talks.ox.ac.uk/talks/id/ae55ecd1-7b99-4980-ad49-19aeb3511c27