This article explores one of the foundational pillar theories of Law and Economics and specifically Public Choice Theory as espoused by Nobel Laureate James M. Buchanan: the “Samaritan’s Dilemma.” Using the Biblical parable of the Good Samaritan, Buchanan imagines a “dilemma” faced by the Good Samaritan when encountering a beaten and bloodied man left to die on the road to Jericho. Using Game Theory, Buchanan constructs a moral quandary that the man from Samaria must necessarily resolve within himself in deciding ultimately whether to lend aid to the beaten man left to die.
Law and Economics, born in the twentieth century, theoretically establishes “efficiency” as its baseline. In evaluating the law from this efficiency perspective, neoclassical Law and Economics economists’ primary hypothesis is that individuals are rational and respond to incentives in a rational fashion. Law and Economics is built on the fundamental belief that markets, particularly free markets, are “more efficient than courts.” Undergirding this theorizing is the presumption that incentives are the primary motivators of individual behavior; how individuals respond to incentives provides a laser-like focus for Law and Economics. If human actors are “rational and respond to incentives” in a rational manner, then how rationality is defined becomes important for Law and Economics hypothesizing. Bottom line rationality for the Law and Economics economist is that individuals are motivated by self-interest and that the rational reaction to an incentive will be to act in a self-interested, wealth-maximizing way. Put simply, a Law and Economics economist would consider a legal situation efficient where rights are allocated “to the party who is willing to pay the most for [them].” Conversely, when an incentive generates an action that results in a penalty, individuals will perform that action less to avoid the penalty.