The law and economics of rule reform

This chapter considers how appreciating both the incentive issues (the law and economic focus) and the epistemic issues (the Austrian focus) facing reformers can offer insight into the limits of what efforts to reform rules can accomplish in practice. I seek to understand the conditions under which reformed rules will stick in the desired manner, as well as incentive and epistemic issue of reforming rules due to issues of credible commitment. Particular attention is paid to the knowledge distance of rule reformers, which refers to the distance between the local knowledge and the knowledge possessed by those designing rules. Rules are less likely to stick when they are designed by reformers who are distant from the locus of knowledge associated with the problem they seek to address. Appreciating both the incentive and epistemic aspects of rule reform allows for a better understanding of the limits of such efforts.