ABSTRACT
The application of economic analysis to law is part of the general expansion of economic reasoning to areas of behavior outside of the traditional market setting. This trend reflects the idea that economics as a discipline is defined by its methodology rather than by its subject matter. In terms of fully understanding the insights that economics can bring to the study of law, the chapter distinguishes between the "economic analysis of law", and "law and economics". The chapter deals with a word on the use of economic models. The use of such models, like controlled experiments in laboratories, allows researchers to disentangle the myriad of factors that influence the operation of complex social institutions like the market or the legal system. One measure of the quality of an economic model is the reasonableness of its assumptions. Another measure is the extent to which the model succeeds in explaining the world and predicting behavior.
