Law Commons^™

Regulating Opt Out: An Economic Theory Of Altering Rules, Ian Ayres

Ian Ayres

Whenever a rule is contractible, the law must establish separate rules governing how private parties can contract around the default legal treatment. To date, contract theorists have not developed satisfying theories for how optimally to set “altering rules,” the rules that set out the necessary and sufficient conditions for displacing a default. This Article argues that efficiency-minded lawmakers in setting altering rules should consider both the costs of altering and the costs of various kinds of error. There are two broad reasons for altering rules to deviate from attempts to minimize the transaction cost of altering, First, the Article develops …