Legal self-efficacy: what does it imply?
Legal self-efficacy is a measure to which degree an individual is comfortable with the use of legal terminology in communication with other people.
Self-efficacy is a tried and tested theory of psychology, for a lenghthier introduction see http://en.wikipedia.org/wiki/Self-efficacy
My theory is an application of Hirschmann's theory of exit-voice-loyalty on law as a means of communication (http://en.wikipedia.org/wiki/Exit,_Voice,_and_Loyalty). It is also an application of Luhmann's theory of law as a means of communication.
The concept is a response to the law and economics approach to understanding the interplay between behaviour of businessmen and the law. In two articles LLSC (1997, 1998) assess creditor protection in a number of common and civil law countries. They conclude that common law is more conducice to external finance of firms since it provides better creditor protection. Their approach was followed by a number of similar attempts (Pistor 2000) and similar approaches. My take is that neither Law and Economics nor Legal sociology have developed the right tools for testing the vast array of theories in psychology on businessmens' transaction behavior. The world of neoclassical economics and ration actor theory still rules in Law and Economics. We all know that humans do not possess perfect information and perfect rationality. Humans are subject to bounded rationality and learned heuristics. Humans are plagued by biases and are not able to make Bayesian calculations instantly, some even grasp what this concept means. This is why the Coase theorem doesn't apply to real life as much as we would like to since transaction costs are too high. That's why we can use Legal self-efficacy as this is a risk reduction.
My concept is used to test businessmen's use of law, granting of trade credit, and private property protection as well as customer structure in the forthcoming dissertation tentively titled "Legal Self-efficacy". It will consist of five to seven papers, four already published and the one I write at present will be submitted for publication.
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