Why are the courts able to serve as a before-the-fact coordination mechanism for private parties?

Question

Quizplus · Accepted Answer

The courts are able to serve as a before-the-fact coordination mechanism for private parties because individuals anticipate the legal consequences of their actions and, in accordance with the rationality principle, usually make decisions to coordinate in a legal way. This means that individuals consider the legal implications of their actions before taking them and will often choose to act in a way that is consistent with the law to avoid legal disputes or penalties. By anticipating legal consequences and acting in accordance with the law, private parties can coordinate their actions in a way that is mutually beneficial and avoids conflicts, making the courts unnecessary for resolving disputes after the fact.

Why Are the Courts Able to Serve as a Before-The-Fact