"Abstract: A system effect arises when the properties of an aggregate differ from the properties of its members, taken one by one. The failure to recognize system effects leads to fallacies of division and composition, in which the analyst mistakenly assumes that what is true of the aggregate must also be true of the members, or that what is true of the members must also be true of the aggregate. Examples are (1) the fallacious assumption that if the overall constitutional order is to be democratic, each of its component institutions must be democratic, taken one by one; (2) the fallacious assumption that if judges are politically biased, courts will issue politically biased rulings. In these cases and many others I will discuss, system effects are an indispensable analytic tool for legal theory. A systemic approach implies that the choices of legal actors are strategically interdependent: the best course of action for any given actor will depend upon what other actors do. Judges deciding how to interpret statutes and the constitution, for example, cannot simply assume, idealistically, that it would be best for them to adopt the approach that would be best for all if adopted by all. If others do not adopt that approach, then the nature of the best approach for the given judge may itself change, taking others' actions as nonideal constraints. The implication is a second-best approach to constitutionalism and legal interpretation.The judge who takes system effects into account may change her approach in light of the behavior of her colleagues and the behavior of other institutions. Although such a judge is strategic, it does not follow that she is unprincipled. Rather, under identifiable conditions, the systemically-minded judge will be a strategic legalist who attempts to act, within the constraints that arise from others' behavior, so as to nudge the legal system toward the best possible state, according to her view of the law. Indeed, the systemically-minded judge may even be a legal chameleon who changes her approach as the legal environment, including the behavior of other judges, changes around her, until the court as a whole reaches an equilibrium of optimal diversity. Although such a course of action is psychologically demanding, the systemic benefits that the legal chameleon creates can be attained at the systemic level instead. Wise appointments by Presidents and Senators aiming to diversify the judiciary would mimic, in a second-best way, the diversity that a bench of legal chameleons would produce"--John M. Olin Center for Law, Economics, and Business web site.