A transaction cost view of moral boundary crossings

I am reblogging part 22 of my review of Robert Nozick’s “Anarchy, State, and Utopia” (ASU). The post below covers the seventh subsection of Chapter 4 of ASU (pp. 71-73). Here, Nozick presents a “transaction cost” approach to moral border crossings: when the parties are able to negotiate ahead of time the price of a wrongful act or moral border crossing (i.e. a low transaction cost situation), boundary crossings should be allowed so long as compensation is paid; by contrast, moral border crossings should be flat out prohibited when ex ante negotiations would be too costly or impractical to take place (i.e. a high transaction cost situation). Although this approach to morality looks promising, I pose a number of questions to Nozick in my post below.

prior probability

Up to now, Nozick has been grappling with the following question: Why not permit all boundary crossings provided compensation is paid? Nozick, however, switches gears and addresses the opposite question in the seventh subsection of this chapter (pp. 71-73): Why not prohibit all boundary crossings to which the victim has not consented to in advance? It is here, in my view, where Nozick provides the most persuasive answer to both questions. In two words: transaction costs! To sum up: when the parties are able to freely negotiate ahead of time the price of a wrongful act or moral border crossing (i.e. a low transaction cost situation), we should allow boundary crossings so long as compensation is paid. By contrast, when ex ante negotiations would be too costly or impractical to take place (i.e. a high transaction cost situation), then moral border crossings should be flat out prohibited and punished…

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About F. E. Guerra-Pujol

When I’m not blogging, I am a business law professor at the University of Central Florida.
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