Basic Instincts:
Participation, Economics and Institutional Choice   

Neil K. Komesar

	I have written many times about the central role of institutional choice and comparative institutional analysis in analyzing law and public policy.  I will return to this theme in the first two sections of this paper.  My primary focus, however, is on an approach to comparative institutional analysis and, therefore, to the analysis of law and public policy that can link disparate visions.  The central feature is participation.  Participation provides important links between economic, non- economic and even anti-economic analyses.  It should be comfortable both to those interested in law and economics and to those interested in civic republicanism. It provides a way for law and economics to return to the basic instincts of economics and to explore areas of law and public policy previously foreign to law and economics.  It also provides a way for non-economists to gain from valuable economic insights while remaining consistent with their primary intuitions.	In the first two sections, I will clear the ground for analysis by showing why institutional choice and comparative institutional analysis are the essence of economics and the core of law.  In the process, issues of participation and the dynamics of participation will begin to surface.  In the third section, I will focus on participation and show its place in the intuition of both economics and law.  In the fourth section, I will use these insights to explore the character of the courts and the interaction between goal choice and institutional choice. 	

I. The Essence of Economics 

	As with other disciplines, there are competing conceptions of economic analysis and, in particular, of the economic analysis of law and public policy. It is common to parse economics into categories like neoclassical and institutional.1  But these categories mask a fundamental point: The essence of economics– every sort of economics– lies in institutional choice and comparative institutional analysis.  Although economics already focuses on institutional choice, it does so in a particularly non-economic way.
	These points are obscured by issues of definition. The term “institution” has two meanings in economics.  Most commonly, institutions are defined as the rules of the game and the game is economic activity.  Institutional economists believe these rules of the game central to economic analysis; neoclassical economists see them as secondary.  The neoclassical view dominates the economic analysis of law and public policy.
	However, another form of institution and institutional choice prevails even for neoclassical economics.  Here institutions are decision-making processes.  Economists of every stripe focus on malfunctions in such decision-making processes as the market and the political process. In the welfare economics tradition, economists ask whether there has been a market failure and then explain, justify or criticize interventions by courts, legislatures or administrative agencies based on the character and extent of this market failure.  Similarly, another area of economics, public choice, addresses institutional choices such as deregulation, increased property rights and increased judicial review by analyzing the political process and its imperfections and malfunctions. This type of institutional choice is fundamental to all economic analyses of law and public policy.
	Paradoxically, however, economists commonly analyze institutional choice in a non-economic way.  They examine this choice by focusing on only one institution; their analyses are single institutional not comparative institutional. In welfare economics, there is no parallel examination of the intervening political process or court and, in public choice economics, there is no parallel examination of the substituted markets or courts. As I have shown elswhere, single institutional analysis is bad analysis.  But it is especially bad economic analysis. 
	By ignoring a comparable consideration of alternatives, single institutional analysis breaches several canons of economics. Most basically, it violates rational choice. There is considerable debate both within economics and between economists and others about the degree of rationality and knowledge assumed by economics.  But, although the meaning of “rational” may be in doubt, the meaning of “choice” is not.  It is unassailable that choice entails alternatives.  
	The failure to compare alternatives also violates the logic of such economic constructs as opportunity costs and the role of complements and substitutes.  In economics, the cost of anything is defined in terms of its alternative uses.  These opportunity costs define the supply curve.  Similarly, the role of alternatives, in the form of variation in the prices of complements and substitutes, is essential in defining the demand curve.  It is simply non-economic to study any choice, let alone one as important as institutional choice, by focusing on one alternative. 
	Yet single institutional analysis prevails. This prevalence reflects the economics of economics. Single institutional analysis is easier and cheaper than comparative institutional analysis. Since, others things being equal, cheaper is better, perhaps single institutional analysis is sensible after all. At the very least, market failure is a necessary, if not sufficient, condition for institutional choices such as government intervention. Moreover, the degree or extent of market failure would seem critical in assessing the case for intervention and, therefore, single institutional analysis would seem at least a good first approximation of comparative institutional analysis. 
	On closer inspection, however, these rationales for single institutional analysis break down.  Market failure is a trivial necessary condition with little analytic value.  It is always fulfilled and, in the complex world in which we live, always significantly fulfilled.  As numbers and complexity increase, parades of horribles– lists of serious institutional malfunctions in the market, political and adjudicative processes– become increasingly long and dramatic.  But they also become increasingly less relevant as alternatives also grow worse.
	This brings us to the second and more important problem with the case for single institutional analysis. A single institutional approach to the analysis of institutional choice cannot be a good first approximation of comparative institutional analysis because institutions tend to move together. In particular, all institutions deteriorate as numbers and complexity increase.  And any good economist should know this.
	Conventional economic analysis is filled with instances in which changes in numbers and complexity make institutions move similarly.2  Increasing numbers and complexity increase transaction costs, information costs and the possibility of collective action problems, producing failed transactions and externalities in the market, overrepresented concentrated interests and rent seeking in the political process, and underrepresented dispersed interests in the adjudicative process.  At base, problems of collective action and transaction costs– or, more broadly, participation costs – haunt all institutions and collective action and participation costs are haunted by numbers and complexity. 
	That institutions tend to move in a similar direction does not mean that they move identically.  As numbers and complexity increase and, therefore, transaction costs and other participation costs increase, institutions vary in the rate if not the direction of their movement.  Basic features of these decision-making processes either by design or happenstance interact with the dynamics of participation to produce differing results. 
	It is here that comparative advantages and institutional choices are revealed.  In works like Law’s Limits and Imperfect Alternatives, I have offered my analytical approach to this task and have used it to make the case for various institutional choices.  But here the point is simpler: That institutions move together makes single institutional analysis irrelevant and comparative institutional analysis essential. 
	Institutional choice– the choice between alternative decision-making processes–  is already central to economic analysis of all sorts.  Having opened the door to institutional choice, economists cannot legitimately employ single institutional analysis.  To be true to economics as well as to be relevant, the economic analysis of law and public policy must be comparative institutional.
	
II.  The Core of Law

	Having established that any economic analysis of law must be comparative institutional analysis, I turn to legal analysis in general.  The last section was not meant to deride economic analysis of law relative to other analyses.  I am a purveyor of economics and in subsequent sections I will be arguing for an economics-based approach to comparative institutional analysis. My point goes beyond the economic analysis of law.  Institutional choice is at the core of law and, therefore, comparative institutional analysis must be at the core of legal analysis of every sort.  
	There is a primary disjuncture between the reality of law and its study and teaching. Although institutional choice is central to law and public policy, the analysis of institutional choice is not central to legal analysis and legal education.  It is quite possible and indeed common for judges and other legal analysts to avoid comparative institutional analysis or even the conscious realization of institutional choice.  Wrong, but sadly common.  
	But it is not possible for judges and other public decision-makers to avoid making institutional choices.  Every important decision  involves one or more serious and difficult institutional choice.  Judges and legislators make essential and difficult institutional choices at every turn– whether they recognize them or not.  Institutional choice is central. The issue is whether judges and other public decision-makers will make and scholars will propose institutional choices without reflection and analysis. 
	It seems obvious that law is about institutional choice.  Look at law as discussed in legal scholarship, taught in law schools and decided by judges.3  A single issue predominates– the role of courts: judicial review, judicial intervention, judicial restraint.  Courts, their role, and their structure is the story of law– at least in the US. 
	But how is the judicial role dealt with by most legal analysts?  The most popular technique is to identify some goal– some definition of the good– and say that courts should pursue this goal.  But why courts as opposed to some other decision-maker?   The difference between regulation and non- regulation or between right and non- right does not follow from the importance of a goal.  It follows only when ones determines who should define and implement the goal making the issue of who decides primary.  
	There is a stark, but essential truth about the institutional character of the adjudicative process here.  Given the size or scale of the adjudicative process relative to either the market or the political process, there is no goal which the adjudicative process can, will or probably ought to dominate.  What the courts should and do decide cannot be determined by focusing solely or even dominantly on goals.
	Another popular technique for defining the judicial role is single institutionalism.  Courts should clean up the mess that institution X is making.  For those on the left, institution X is often the market.  For those on the right, it is often the political process.  But for the reasons I set out in the last section, nothing follows from the identification of the horrors of another institution.  
	My sophisticated and somewhat cynical friends tell me that comparative institutional analysis will not prevail because legal scholarship, legal education and law are not about analysis; they are about ideology or political viewpoint.  People adhere to or reject an analysis based not upon its quality but upon its perceived ideological position. Here analysis– comparative institutional analysis or any other variety– is only rhetorical window dressing.  
	Common ideological categories are pretty primitive.  Law and economics is on the right and critical legal studies and probably law and society are on the left.  This categorization is rough, but it roughly captures the prevailing view.  Faculties are split along these lines and students hear different messages from those in each category. 
	Through the lens of institutional choice and comparative institutional analysis, however, ideology– at least in its common forms– is a sterile means of understanding law, constructing legal analysis, defining legal education or determining a program for reform. Common ideologies are either an attachment to a goal, such as equality, liberty or resource allocation efficiency or the position that a given goal is attached to a given institution or, at least, that a given goal means the rejection of a given institution.  But goals do not dictate programs.  As I have shown repeatedly in both Law’s Limits and Imperfect Alternatives, the same goal is easily associated with quite opposite results.  Translating a goal into law and public policy requires institutional choice.  And that choice is seldom self-evident.
	The power of institutional choice even in ideological thinking is reflected in a distorted way in the tendency to hard-wire goals to institutions.  Legal analysts holding strong ideological views often define them in institutional terms. Thus, for example, Richard Epstein’s ideology is defined by a deep aversion to the regulatory state and Margaret Radin’s ideology is defined by a deep aversion to the market. In the view of Epstein and Radin, their philosophers, Locke and Hegel, are associated with their institutional choices.

	But hard-wiring goals and institutions is untenable.  Institutional choice, at least institutional choice in the real world of high numbers and complexity, is filled with paradoxes and counterintuitive combinations of goals and institutions.  In Law’s Limits, I showed that Epstein’s goals are easily associated with unconstrained decision-making by the political process and that Radin’s are consistent with a heavy reliance on the atomistic market.  Perhaps Epstein’s or Radin’s program is correct.  But if it is, it does not follow from either their goals or their belief that a given institution– the political process for Epstein and the market for Radin– is highly suspect.  Similar problems infect the positions of  Dworkin, Hayek and many others.4 
	Political or ideological position without comparative institutional analysis is largely random.  There is no there there. Without serious comparative institutional analysis, there is no reason to believe that goals and programs are at all related.  Ideology, either as a focus on goals or a simple association of a goal with an institution, is a deficient way to understand or prescribe law and public policy, do legal analysis or structure legal education.

III. Comparative Institutional Analysis and Participation 

	Having shown that analysis of law and public policy– both economic and non- economic– must focus on institutional choice and employ comparative institutional analysis, the question is how to approach this essential but difficult task  My approach is basically economic.  But it has a feature that links economics to the instincts of law and of non-economic analyses of law. 
	I see institutional behavior as a function of participation, participation as a function of the costs and benefits of participation and the costs and benefits of participation as a function of variables like numbers and complexity and the distribution of stakes.  Participation and representation lie at the core of many approaches to law from civic republicanism to law and economics. 
	I see decision-making  processes as complex, sizeable and dominantly bottom-up rather than top-down.  The degree to which an institution is characterized by bottom-up versus top-down decision-making can be an important design feature.  But even institutions designed to be top-down are likely to be dominated by bottom-up, atomistic forces. Here the instincts of economics are valuable.  Done correctly, economic analysis focuses on bottom-up, atomistic forces, casts the impact of its variables as continuous and views most major impacts as produced by endogenous variables rather than by exogenous parameters. 
	But I differ with most law and economics analysts in two ways.  First, I adopt a comparative institutional approach to the analysis of institutional choice– and, as I have shown, so must they.  Second, I am less convinced than they are that law and economics must be wedded to the goal of resource allocation efficiency.  That does not mean that I share the aversion to resource allocation efficiency felt by critics of law and economics.  Correctly understood, resource allocation efficiency is a valuable goal both as a matter of description and prescription.  My desire to cut the tether to this goal comes from analytical rather than programmatic or ideological grounds.  The power of economic analysis is not limited to this goal, especially once one recognizes the central place of institutional choice and comparative institutional analysis. 
	In this section, I will explore several of these themes including participation as the link between economic analysis and legal analysis and the varying roles of bottom-up analysis across institutions.  I will turn to the difficult questions of the correct view of the adjudicative process and the interaction between goal choice and institutional choice in section IV.  

A. Economics and Participation 

	The role of participation is not explicit in economics.  But it lies not far below the surface. It is embedded in basic concepts such as transaction costs, externalities and resource allocation efficiency.5  Transaction costs are the costs of market participation.  Externalities are failures of market participation, arising when missing transactions induce allocative decisions that do not reflect all costs and benefits.  Resource allocation efficiency is defined by transaction costs and violated by externalities and, therefore, is a participation-based notion.  
	 Similarly, economic analyses of non-market institutions such as the political and adjudicative processes depend on the dynamics of participation.  The economic analysis of regulation and more broadly the interest group theory of politics emphasize distorted participation in the form of the overrepresentation of concentrated interests.  Distortions in participation and the factors which cause them are fundamental to these analyses.  Participation is also central in the adjudicative process, governing who litigates and the extent of that litigation.  The mix of issues reaching the adjudicative process determines its effectiveness as an alternative to the market or the political process.  As a general matter, the same collective action problems and issues of the economics of information used to understand participation in the market are important in understanding participation in the political process and the courts.  In all institutional settings, the dynamics of participation determine who is active and who is dormant and, therefore, whose interests are represented.
	In turn, numbers and complexity determine institutional participation.  In the market, increasing numbers and complexity increase transaction costs.  In the political process, concentrated high-stakes interests prevail over dispersed small-stakes interests where numbers and complexity are high.  Simple settings are easily monitored by even low-stakes players and low stakes majorities are active.  As numbers and complexity increase, the costs of information and organization increase and it becomes increasingly likely that low-stakes majorities will be dormant.  The economic theory of regulation depends on asymmetric information and, in turn, high numbers and complexity.  Similarly, litigation is absent or skewed when high numbers and complexity cause inaction or asymmetric action and, therefore, inaction or error by juries and judges.  
	All of this is inherent in existing economic analysis.  Explicating the role of participation will produce a more powerful economics that is better in touch with its basic logic.  It will allow the integration of the notions of market malfunction from welfare economics and political malfunction from public choice economics into an analysis where these failures can be compared.
	Moreover, understanding the dynamics of participation and the distortions they create is central not just to understanding the workings of the institutions of resource allocation efficiency, but also to understanding the workings of the institutions of all social goals.  The problems in participation captured in notions like market failure and political malfunction are as relevant to the question of which, among highly imperfect institutional alternatives, is best to produce fairer income distribution or better protection of individual liberty as it is to which will produce greater resource allocation efficiency.  
	Participation is even central to the definition of many goals.  Seemingly diverse views or philosophies accentuate the importance of participation and the detriments of inadequate, incomplete or unequal participation.  Civic republicans stress greater and more equal participation as the core of the goals they seek.  The amount, pattern and quality of participation seems inherent in egalitarian and  communitarian notions. As we have just seen, resource allocation efficiency, a seemingly quite different societal goal, is also defined in terms of  participation.
	Participation provides a robust and largely unexplored connection between economics and other approaches to law and public policy.  It draws economics closer to seemingly different views of the world on two levels: the use of the dynamics of participation to understand the institutional choices inherent in the achievement of all goals and the use of participation to explore the basic definitions of goals.  Economic analysis and legal analysis can be developed in a parallel fashion by emphasizing institutions as processes and the role of participation in understanding these processes. 

B. The Economics of Participation– Transaction Costs, Atomism, Continuousness, Endogeneity and the Economics of Information 

	An economics focused on participation has many lessons for those interested in institutional choice and the analysis of law and public policy.  Ronald Coase cast the character of market action, market failure and market organization in terms of transaction costs.  Transaction costs are the cost of participation in the market.  From this perspective, it is easy to see parallels between the market and non- market institutions like the political process and the adjudicative process.  Participation create analogous impacts in all institutions.  Interests go unrepresented or are inadequately or even perversely represented in the political or adjudicative processes because of the high costs of representation (participation) in these processes.  Unrepresented interests are external to decision-making in the political process and the adjudicative process just as they are in the market.  Informational asymmetries produce a misrepresentation of interests and values in non-market institutions just as they do in the market. 
	Variation in the benefits of participation also impact all institutions similarly. The impact of variation in the benefits of participation shows up dramatically when significant social impacts are highly dispersed leading to small per capita stakes.  Small per capita benefits increase the chance of failure of representation of these impacts in all institutions.   Variation in the distribution of benefits– in particular,where there are dispersed benefits on one side and concentrated interests on the other– is inherent, if not explicated, in most conceptions of the political process and adjudicative process employed in analyzing the political process and the adjudicative process– including mine. In terms of the economics literature, the analysis of participation joins and extrapolates the work of Coase (transaction costs economics) and the work of Mancur Olson (collective action).6  
	Participation translates through aggregate, bottom-up, atomistic decision-making processes.  From the time of Adam Smith, understanding the market has been a matter of understanding the interaction of many parties each seeking their own goals and operating through forces largely beyond their control to produce aggregate outcomes.  If things work well, these aggregate outcomes are attractive.  But whatever the attractiveness, the market has been seen and is correctly seen as a large scale, atomistic and bottom-up process.  Economists see the common “officials” of the market– moguls, corporate captains, CEOs etc.– as secondary.  At least as a first approximation, this is a powerful way to understand the market. It is a tribute to the power of this conception that no legal analyst (economic or not) ventures into an analysis of market- related law without a distinct awareness of the market as a bottom-up, atomistic process. 
	Various analyses of the political process have adopted a bottom-up approach.  Theories like the economic analysis of regulation and more broadly the interest group theory of politics do not focus on legislators and administrators. They focus on the action of interest groups in lobbying, contributing, propagandizing and bribing.  I have taken these bottom-up approaches to the political process and expanded them into a continuum of political-process behavior ranging from over-representation of the few– the minoritarian bias that characterizes the views of the interest group theory of politics– to the over-representation of the many– the majoritarian bias that characterizes notions like the tyranny of the majority and animates the concerns of the equal protection clause.  This two-force model is driven by the same participation variables, such as the distribution of stakes and the cost of information, that underlie the narrower bottom-up models. 
	A basic instinct of economics is at play in these bottom-up conceptions: atomistic forces overwhelm other forces.  All producers would like to charge exorbitant prices.  They cannot because the forces of competition will not let them.  Similar atomistic forces operate in the political and adjudicative processes.  These atomistic, reactive forces find the gaps in official action and exploit them.  These forces produce unforseen or unintended results.  
	These atomistic forces are powerful, for good or evil.  Institutional behavior is a function of these atomistic forces. Whether it is solely a function of these forces and the extent to which bottom-up versus top-down influences distinguish between institutions is a topic I will address in section IV.  But there is no avoiding the role of larger systemic, primarily bottom-up, forces in institutional behavior.
	Economics sees behavior as continuous with variation linked to a small number of variables– mainly costs and benefits.  These attributes pull together isolated observations and generate continua and interactive relationships as well as explaining variation in these relationships and, therefore, in outcomes.  Many things can be explained by the same set of variables (costs and benefits in one form or another) even as one moves from one human reaction to another. 
	Economics at its best also generates results from within the analytical framework. Combined with the finite set of variables, this instinct for endogeniety provides a way to understand the dynamics of events that would otherwise be seen as discrete and fixed. For example, deterrence can be analyzed in terms of the simple observation (or belief) that people react to penalties or that people do not.  It can, however, also be carried on by asking whether there are variations in factors like the distribution of stakes (here the distribution of potential penalties) and the costs of receiving the deterrent signal.  In otherwords, a continuum of results can be generated by the costs and benefits of receiving the deterrent signal– a variant of the analysis of participation.7  
	By emphasizing the central role of participation and, in turn, the costs and benefits of participation, a participation-based approach to institutional behavior can expand and deepen these economics tendencies.  Consider the economics of information.  Information, its cost of access and the incentives to acquire it are central in understanding institutional behavior.  Participation is heavily dependent on information.  But the causation is also reversed.  The acquisition of information is dependent on similar variables to those that determine participation in general– the costs of information and the distribution of stakes.  Consideration of the role of information is especially powerful where it treats information and its failings as an endogenous continuum rather than simply as an exogenous parameter (such as a simple observation of bounded rationality or consumer ignorance).  Who has information and who does not both determines and is determined by the dynamics of participation.

IV.  Quandaries and Projections– A Closer Look

	We can see both the function and the challenges of a participation-centered comparative institutional analysis in three contexts: the analysis of the institution that should be most familiar to legal analysts– the adjudicative process, the interaction between bottom-up and top-down forces and the interaction between institutional choice and goal choice. 

A. The Character of Courts 

	There are well-established bottom-up visions of the market. As we have seen, these can easily be translated into the costs and benefits of participation.  Similarly, there are prominent bottom-up, participation-based visions of the political process including the economics theory of regulation and more generally the interest group theory of politics.  The same set of participation variables, when integrated into the two-force model of politics, can generate a broader spectrum of political outcomes ranging from minoritarian bias to majoritarian bias.
	But the adjudicative process remains less explored.  It is one of the paradoxes of legal analysis that legal scholars have the least to say about the institutional character and behavior of the institution that is their central focus.  Commonly, courts are either assumed to be an easily available, frictionless response for any political malfunction or market failure or courts are summarily abandoned based on the view that they make mistakes, are not majoritarian or lack legitimacy. 
	There seem to be two prominent systemic differences between the adjudicative process and the market and political processes: the adjudicative process is less subject to bottom-up forces and the adjudicative process is smaller and less able to grow.  The first difference receives the greatest attention.  It is reflected in the often-mentioned independence of the judiciary and the associated judge-centered nature of legal scholarship.  Although it is roughly accurate as a relative statement, the role of bottom-up features remains important and perhaps even dominant even in the adjudicative process.  The second difference is reflected in occasional concerns about litigation explosions and managing of the docket of the US Supreme Court.  But the full implications of the growing gap between the size of the adjudicative process and the institutions it often reviews are both significant and unappreciated.  When these two features are explored, the results, I fear, will discomfort those who hold conventional views of the behavior and role of courts. 
	The adjudicative process is structured to insulate judges and juries from the atomistic forces that operate so powerfully in the political process and the market. Various rules, such as the sequestering of jurors, the random selection of the jury pool and the restriction of ex parte meetings with judges, seek to reduce or eliminate direct and informal access to the judges and juries and, in particular, to their self-interest.  As is true so often with institutional features, there are trade-offs for the benefits of judicial and jury independence and a more controlled decision-making process. It is a trade-off between reducing bias on the one hand and reducing information and expertise on the other.  
	This trade-off shows up in the choice between the adjudicative process (judges and juries) and administrative agencies. There is a sizable literature raising doubts about the competence of judges and juries as decision-makers.  Jurors are randomly chosen from the general population, and individual jurors are often chosen in the voir dire explicitly to avoid expertise in the specific technical issue of the case. These inexpert juries are often then asked to absorb the technical and complex testimony of conflicting expert witnesses and to decide difficult substantive issues. Similarly, trial and appellate judges formally trained only as lawyers and coming from a wide variety of practice backgrounds are regularly asked to judge the facts and fashion the remedies for litigation about complex and sensitive issues of public policy. These judges, both trial and appellate, usually are not asked to specialize in one type of controversy and, therefore, do not obtain the expertise that frequent exposure would bring.
	These inexpert juries and judges are often contrasted with the technically more expert bureaucrats of administrative agencies who, like juries and judges, serve as fact-finders and implementers of the law.  From the perspective of technical expertise, these agencies with their narrower scope and more specialized staffing are superior to generalist trial court judges and randomly chosen juries.  They also have the distinct advantage of broader-based, informal interaction with the parties and interest groups impacted by the policies in question.
	But the very characteristics that make juries less expert make them less subject to systematic influence and bias in many settings.  Where the conditions for minoritarian bias are present, bottom-up forces will be skewed in favor of concentrated interests.  Here the structure of the adjudicative process can provide insulation from these skewed effects.  The transient jury is not a good target for one-sided efforts at influence associated with minoritarian bias. The constantly changing jury is difficult to influence through continuous long-term contact and propaganda. The parties are forced to sway the jury by advocacy in the more formally confined adversarial process, where opposing parties have more equal opportunities to present their viewpoints.  In addition, the random jury selection process makes any attempt to staff the jury with cronies difficult if not impossible.  Although inducement– most likely in the form of bribes– is not unknown, it is difficult both because juries are, to some degree, separated from the general public during deliberation and because the costs of bribery, including possible criminal sanctions, are seldom justified when the bribery will cover only one case rather than a set of cases.8  Administrative agencies, in contrast, are fixed targets hearing many cases, and are easier and more worthwhile to influence via education, bribery, or restaffing.
	This tradeoff between the amount and skewedness of information is pervasive and cannot be counted just in terms of technical expertise.  There is a less noticed but more troubling and important tradeoff between information and independence in the adjudicative process: Insulation separates judges from information about the desires and needs of the public.  In politics, public officials must understand the wants and needs of the general public or at least the influential parts of the general public to remain in office or obtain higher office. These incentives link political officials to the populace and provide them with robust if biased access to public desires and needs.  Information on desires and needs is needed to make public policy; it provides the “weights” to be given the various opposing public policy positions or options. 
	By contrast, judges and juries stand aloof.  They depend on others to convince them by controlled sources of evidence and reason, but they do not depend on these others for their jobs and livelihood. The adversarial process attempts to equalize the representation of positions and the delivery of information by assuring that both positions are at least formally represented and that information reaching judge and jury is more likely to be confined to that brought them by opposing advocates.
	The tradeoff is between a political process that integrates more information but with a more significant risk of bias and corruption and an adjudicative process that suppresses information but decreases distortions present in the political process. The adjudicative process hears and considers less, but can be more evenhanded in what it hears and considers. The price of this evenhandedness is most dramatically revealed in that range of social issues where the adjudicative process hears nothing– a significant disability traceable to the high cost of participation.  This tradeoff between information and evenhandedness is among the most challenging issues in institutional choice.
	The formal barriers set up to isolate judges along with the central place given judges and, in particular, appellate judges inadvertently creates the most prominent systemic feature of the adjudicative process: its limited size.  The appellate courts are difficult to expand and this bottleneck constrains the growth of the adjudicative process in general.  Each judicial system within the United States has at its apex a supreme court. These courts are staffed by a small set of judges– nine in the case of the Supreme Court of the United States. The most obvious reform, increasing the number of judges on these high courts, does not easily or even necessarily increase the output of this court.  Although an increase in judges would decrease the per judge load of opinion writing, increasing the numbers makes collective appellate decisions more difficult and time consuming.9  The bottleneck of the appellate courts makes it impossible for the adjudicative process to be expanded as easily as the market and the political process, thereby producing the prospect of increasing demand for adjudicative services without a parallel increase in supply.  
	We can see the influence of these systemic pressures and the implications of bottom-up and top-down elements in the adjudicative process in the context of constitutional law where they cast doubt on the relevance of conventional modes of constitutional analysis.  Most legal scholars tell the story of US constitutional law, constitutional rights, and judicial review in terms of a search for fundamental values and, therefore, fundamental rights.  Scholars and judges describe these rights in broad and resounding terms.  Rights seem to represent what is most important in society. 
	In truth, however, rights have a limited correlation with importance. Critics of the fundamental rights tradition have pointed to the significant gap between the claims for and the reality of fundamental rights.10  This has sent constitutional scholars scurrying to find some basis for fundamentalness in natural law, moral philosophy, tradition, or consensus.  From an institutional choice perspective, however, it is not difficult to understand both the role and limitations of fundamentalness in constitutional jurisprudence.  Form follows function and law follows institutional choice.   
	In US constitutional jurisprudence, a judicial finding of “fundamental rights” allocates decision-making responsibility.  A finding that legislation affects a fundamental right removes that issue from the legislative process and allocates responsibility for its determination to the judiciary.  If housing, jobs, food, commerce, taxation, national defense, and foreign affairs were declared “fundamental,” the judiciary would have to take a serious hand in their effectuation.  At least in the US, that is not the case nor could it be.  
	These subjects are not excluded from the list of “fundamental rights” because they are socially unimportant.  If anything, they are excluded because they are too important.  More exactly, they are excluded because the political process handles them better (less worse)than the adjudicative process.  Although these issues are often handled badly by the political process, their scale, difficulty, and the basic need to tap the feelings and desires of the populace generally make even the highly imperfect political process superior to the adjudicative process.  The severity of political malfunction sometimes warrants the courts deciding sensitive issues of considerable import, but they simply cannot dominate important societal decision-making. 
	Thus, although it appears that the term “fundamental rights” defines institutional choice in the form of increased judicial review, in reality, the causation is reversed.  Institutional choice defines “fundamental rights.”  Fundamental rights arise when it is sensible to substitute judicial for legislative decision-making.  Constitutional scholars who look for the meaning of this constitutional construct in natural law and moral philosophy are looking in the wrong place.  Certainly, we do not want to allocate scarce judicial resources to totally unimportant values.  But we cannot and do not allocate the determination of all or even most fundamental issues to the courts. Even that small subset of important issues where courts play a role remains subject to constant change.  The correlation between rights and importance is indeterminate and, because at high numbers and complexity institutional choices are often evenly matched, we get close calls and cycling of decisions.  Shallow and fluctuating rights result.
	The courts can only play a limited role in societal decision-making.  The limits of constitutional law stem from size and resources not legitimacy.  Budgetary constraints interact with the dynamics of participation to confine and define the judicial role.  Even if we ignore limits on judicial competence and distortions in the dynamics of litigation, we cannot envision the courts seriously considering even a small fraction of important societal issues.  It is even doubtful that they could dominate any issue of serious breadth for an extended period.  
	It is easy to see why many legal academics love courts.  They can talk to them.  Discourse and reason are easier to imagine in top-down decision-making.  To some degree, this is true.  But only a limited degree.  Systemic elements like scale and bottom-up elements such as the dynamics of litigation dominate even judicial decision-making. No one can really understand constitutional law without understanding these features.

B. Further Iterations on the Impacts of Atomism and the Trade-off between Bottom-up and Top-down 

	When characterizing an institution as bottom-up or top-down, it is common to treat this determination as exogenous to the analysis.  The balance between top-down and bottom-up forces is fixed unless altered by structural changes external to the analysis. But, in fact, the degree to which the judiciary is top-down is itself dependent on the dynamics of participation.  The design of the adjudicative process affects the dynamics of participation by changing the costs and form of participation.  But it also works the other way: the dynamics of participation influence the degree to which the structures of the adjudicative process actually protect judges and juries from bottom-up forces. Bottom-up activity will increase as the importance of the judicial decisions increases.  
	Increasingly, interest groups have attempted to alter the output of the adjudicative process by operating directly on the adjudicative process itself.  The appointment and confirmation of federal judges and in particular the appointment of Supreme Court Justices have become increasingly impacted by the bottom-up efforts of various interest groups as issues important to these groups have been drawn into the adjudicative process.  Less noted but potentially as important is the increased presence of special interest activity in the election of state court judges.11  The most organized of these campaigns have focused on electing judges sympathetic to reducing tort liability and damages.    
	Whatever ones position on tort reform or the politics of appointments to the US Supreme Court, this activity is interesting from the vantage of institutional behavior.  Increased interest group activity in the election judges can be seen as the product of the dynamics of participation– in particular, the growing impact of judicial decisions.12  Stakes have risen and now it is worth investing in judicial elections. Given the right configuration of the distribution of stakes and the costs of participation, atomistic forces– bottom-up activity– will alter judicial decision-making without operating through the dynamics of litigation and the adversarial process.  If the stakes are sufficient, atomistic forces will find a way around the barriers meant to insulate judges and juries.  The independence of the judiciary becomes a function of the forces of participation. 
	There is a broader point here. Even if scholars and public officials will not do comparative institutional analysis, atomistic actors will.  They will choose among institutions based on the costs and benefits of participation in these institutional alternatives.  As the costs or returns of one institution change, others will be substituted.  High-stakes players will hunt for the differences or advantages of one set of institutions over another.  They will seek loopholes or gaps in the structures of an institution and exploit them.  What was unforseen is revealed.  If reformers do not understand how various actors will respond to the institutional choices inherent in their reforms, they will never see the holes in their well-intentioned plans.13  People make institutional choices constantly and what law and public policy is and can be is a function of these choices and, therefore, these choices should not lie below the radar of judges, lawyers and legal scholars. 
	Atomistic forces of a different variety may operate to control the extent of judicial activity even if judges are oblivious to the consideration. Here a bit of economics helps.  In response to critiques of rationality assumptions in economics, Gary Becker suggested a non-rational theory of the downward-sloping demand curve based on budget constraints.  As prices rise, an individual otherwise oblivious to price changes would simply have less to spend and would consume less thereby producing a negative relationship between price and quantity.  The same phenomenon could be used to understand a reducing judicial role relative to other institutions as these other institutions and, therefore, the demand for judicial review expands.  A judicial agenda produced without direct concern about the implications of strain on resources would simply run out of resources– it would be limited even if the rationing process is unintended. 
	It is unlikely that judges are in fact oblivious of scale.  There are too many examples in either judicial language or in judicial reaction not to see conscious weighing of the implications of scale.  At the least, we can expect ex post rationing in which judges consciously respond to significant scale problems by cutting back either in those projects which are now showing their hidden costs or by rationing the remaining resources by some ranking of the net benefits of various judicial projects.  Scale matters– even with little or no judicial consciousness of the issue.  
	I have spent most of the latter part of this paper examining various aspects of the adjudicative process.  Systemic features like scale distinguish the adjudicative process from the market and political processes.  It is also distinguished by the greater role of top-down features although, as I have also shown, the same sort of bottom-up so familiar in analyses of markets and even of political processes operate in the adjudicative process. 

C. Goal Choice and Institutional Choice 

	I argued earlier that focusing on the dynamics of participation also expands the tools of economics beyond the world of resource allocation efficiency, that participation provides the link to the workings of the institutions of all social goals not just resource allocation efficiency and that participation seems central to the definition of wide range of goals. These assertions deserve a closer look.  
	That participation provides the link to the workings of the institutions of all social goals not just resource allocation efficiency seems self-evident.  No social goal can be realized without assigning implementation and even definition to one of the large scale decision-making institutions we address normally in connection with resource allocation efficiency.  These institutions are complex decision-making processes influenced by the dynamics of participation and these basic attributes do not change because an institutions is assigned a different goal.  Any societal goal will have to run the same gamut of institutional interactions and alternatives.  There will be no frictionless institution for any goal.  Nor will it be obvious which institution matches with which goal– at least not in the real world of high numbers and complexity.
	The task of integrating institutional choice and goal choice is made difficult by the inadequacy of the attempts to define these goals.  Philosophers and the philosophically- inclined among analyst of law and public policy do not do a good job defining the goals upon which their analyses are supposedly based.  Of direct relevance, they have a tendency to link goal choice and institutional choice without much recognition of– or thought about– the link. The vague goals they propose frequently stem from implicit gut reactions to institutional failures which are seldom if ever explored.  Consider the work of two prominent philosophers, John Rawls and Ronald Dworkin.  
	Dworkin’s analysis relies heavily on his notion of reflective, carefully reasoning judges– in his terms, Herculean judges.  I have already alluded to the deep attraction of the seemingly more top-down adjudicative process to legal scholarship.  Here are people to converse with– people like us. Dworkin’s reflective judges are the ultimate pen pals.
	But, even if we assume that judges are the ultimate in reasoning, this imagery runs into the hard reality that the adjudicative process is not simply or even dominantly top-down.  Even the best of judges are deeply ignorant and increasingly so.  They are situated in the larger adjudicative process.  Their insights are determined by systemic feature like the dynamics of litigation, the twists and turns of the adversarial process and the limits on physical size.  When we consider the role of bottom-up atomistic forces in determining not only what judges see, but also who they are, defining values let alone law and public policy against the background of idealized discourse looks foolish.14  
	John Rawls attempts from the outset of his work to cordon off considerations of the character of real-world decision-making institutions from his search for the correct set and hierarchy of values.  His is the ultimate attempt at goal choice divorced from institutional choice.  Unfortunately, it is impossible to understand his preferences or the preferences he supposes the correctly-situated would have without immediately running into institutional choice.  For example, his significant preference for liberty makes sense only when one supposes serious political malfunction.15  Many of the most traditional notions of fundamental values– like liberty–  reflect deep if unarticulated (and unexamined) perceptions of institutional failure– often political malfunction.  These traditional perceptions are likely even truer today where the political process functions at increasingly high numbers and complexity.  But from a comparative institutional, rather than a single institutional, perspective increasing political malfunction tells us virtually nothing about the basic constitution.  Fundamental constitutional values and their manifestation as traditional rights presuppose more than a long tradition of distrust of government; they also suppose the attractiveness of substituting institutions like the adjudicative process.  As we have seen, the attractiveness and even the availability of judicial responses is at best limited.  Even assuming the severe political malfunction inherent in central concerns about liberty, the reasonable individual behind the veil of ignorance would as likely ignore liberty– thereby leaving it to the highly defective political process– as to single it out for special concern and judicial decision-making.  The same can be said for other values– like income distribution–  central in the Rawlsian world.  Even ranking values requires deep and sophisticated institutional choice.  For both Rawls and Dworkin, institutional choices and suppositions are already central.  It is institutional analysis that is missing.
	Also blocking the way to understanding goal choice is the tendency of legal scholars to invent a new goal for every issue.  Statements like the courts are pursuing– or should pursue–  the goals of corporate harmony or contractual integrity– or the always popular “freedom of contract”– fill the pages of law reviews and books.  Most of these considerations could be blended into standard goals like resource allocation efficiency, equity, fairness or equality (of various varieties).  Of course, these standard goals suffer from problems of definition.  If the enunciation of new goals was an effort to better specifying aspects of these broader goals, it might be worth the effort.  Unfortunately, the plethora of new goals are suggested without much examination or further definition.  They seem to be a rough description of the legal subject matter, the repetition of some vague judicial phrase or the author’s implicit conclusion without any awareness of whether that result was the product of a devotion to a particular value or the product of other considerations such as institutional choice.  In part, these fractured goals also reflect the simpleminded connection between goals and institutional choice inherent in common ideologies. For example, fighting pollution is a goal that can be integrated into resource allocation efficiency, but it seldom is because of the unreflective association between resource allocation efficiency and anti- regulation common to both law and economics scholars and their opponents. 
	Fractured goals weaken the analysis of goal choice and of the choice of the decision-making institution to achieve them.  In turn, the allusiveness of goal choice obscures decisions that are dominated not by some vague goal but by an important and difficult institutional choice.  For example, as I showed in my various analyses of the Boomer case, variation in legal outcomes is less likely to be the product of variation in the desire to protect property and more a question of the means of protecting property and the institutional choices involved in achieving that goal.
	All of this forces me back to basic propositions.  Legal analysts need to think much harder about whether and when they are talking about institutional choice and when they are talking about goal choice.  My basic intuition is that goal choice is simply not as important as people believe.  Most people share an amorphous definition of the good that is part resource allocation efficiency (the size of the pie) and part equity (the division of the pie).  This is generally joined to notions of freedom and liberty that reflect implicit institutional choices based on long-held (and no longer consciously recognized) beliefs about the dangers and evils of various institutions, particularly the government.  Carefully considering institutional choice and, therefore, comparative institutional analysis provides a way to more thoughtful and better articulated goal choice.  If we can separate out institutional choice elements, definitions of goals will benefit.  Here analysis can be sharpened and we can better understand where and why people actually differ and the implications of these differences. 

Conclusion

	Whether it is convenient or not, institutional choice is the essence of economics and the core of law and, therefore, comparative institutional analysis should be a central element in all analyses of law and public policy and in the teaching of law.  In facing this daunting task, a focus on participation and the dynamics of participation is crucial.  Participation links economic and legal thinking and forms the basis for effective comparative institutional analysis.  Economics– at least the economic analysis of law and public policy– needs to recognize that participation and comparative institutional analysis are its basic instincts.  Thus conceived, economic analysis has valuable contributions to make to the comparative institutional analysis of law and public policy such as the respect for the power of atomism and the instinct for endogeniety and continuity.  An economic analysis sensitive to its basic focus on the dynamics of participation can serve to enlighten not just issues of resource allocation efficiency, but also issues concerning most social goals.