# kaal:claim:2267560-019

**Claim.** NIE acknowledges that transaction costs, imperfect information, and bounded rationality influence the rulemaking process, with the consequence that even optimal solutions to regulatory problems become unstable and suboptimal over time.

**Type.** failure  **Support.** argued

**Source quote.**

> NIE acknowledges that transaction costs, imperfect information, and bounded rationality influence the rulemaking process (Homann and Kirchner 1995; Furubotn and Richter 2005) and even optimal solutions to regulatory problems can become unstable and suboptimal over time.

**From.** Wulf A. Kaal, *Evolution of Law Dynamic Regulation in a New Institutional Economics Framework* (2013), III. Rulemaking in a Dynamic Framework, page 7

**Cite as.** Wulf A. Kaal, Evolution of Law Dynamic Regulation in a New Institutional Economics Framework (2013). SSRN: https://ssrn.com/abstract=2267560

**Verify.** sha256 of source PDF `7ecc9dd1826121a95bf252476cdaa1c8737ad8079e12caf66c4342ffae7af8af` at https://raw.githubusercontent.com/wulfkaal/Academic-Papers/main/papers/pdf/Kaal%20-%202013%20-%20Evolution%20of%20Law%20Dynamic%20Regulation%20in%20a%20New%20Institutional%20Economics%20Framework.pdf

**Failure mode.** instability of optimal regulatory solutions  (family: rule-obsolescence-and-ossification)

**Topics.** economics, risk-and-incentives

**Keywords.** transaction-costs, bounded-rationality, optimal-rules, regulatory-obsolescence

**Related claims.**

- restated_by: https://wulfkaal.github.io/claims/kaal-2014-dynamicregulationviagove-005

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