Real Options Theory for Law Maker

Marie Obidzinski and Bruno Deffains

Working Papers of BETA from Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg

Abstract: In rapidly changing areas of law, the writing of rules is a challenging issue for lawmakers. Obsolescence impede law to capture the objective of an underlying policy. The legislator, the judge and the regulator are considered as producers of law who have to decide whether or not to invest in a particular type of law. In order to get more information on the context, lawmakers may also choose to wait before investing in law. Using the real options framework, we show that the degree of precision should be considered as a degree of flexibility of legal rules and we describe how it affects the value of the investment. We then analyze the trade-off between waiting and reducing the degree of precision and we show that the degree of precision of legal rules positively affects the value of waiting in lawmaking.

Keywords: Obsolescence; Rulemaking; Degree of Precision; Real Options. (search for similar items in EconPapers)
JEL-codes: C61 G12 K00 K40 (search for similar items in EconPapers)
Date: 2006
New Economics Papers: this item is included in nep-cfn, nep-fin and nep-law
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
http://beta.u-strasbg.fr/WP/2006/2006-04.pdf (application/pdf)

Related works:
Journal Article: Real Options Theory for Law Makers (2009)
Working Paper: Real Options Theory for Law Makers (2009)
Working Paper: Real Options Theory for Law Makers (2009)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ulp:sbbeta:2006-04

Access Statistics for this paper

More papers in Working Papers of BETA from Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg Contact information at EDIRC.
Bibliographic data for series maintained by ( this e-mail address is bad, please contact ).