Last updated: 4/20/00  

Economic Reasoning and the Law
Spring 2000

Announcements

Assignment for April 24th.   On Monday the 24th, the last day of class, we will complete our discussion of the economics of family law, focusing on Landes and Posner's The Economics of the Baby Shortage. If there is time, we will also compare Landes and Posner's arguments with those made by Michael Trebilcock and Rosemin Keshvani in their article, Private Ordering in Family Law.

I will hold additional office hours next Tuesday and Thursday mornings from 10 till 12, in addition to my regular Wednesday afternoon time slot. You are also encouraged to use e-mail and the discussion page for review questions.

The final exam will be held on the morning on Wednesday, May 3. Adminstrative details are available on the exam page. (Posted 4/20/00)

Assignment for the week of April 17. On Monday the 17th, we will continue our discussion of the radical critique of the economic approach, focusing on Mark Kelman's essay in the reader. We will then discuss the related communitarian critique, focusing on Steven Kelman's Ethical Theory and the Case for Concern About Charges. The excerpts by Horwitz and White are background reading.

Then, on Wednesday the 19th, after finishing leftover material, we will sum up the critiques and move on to applications in the area of family law. You should focus on Leff's Economic Analysis of Law: Some Realism about Nominalism, and Landes and Posner's The Economics of the Baby Shortage. (Posted 4/13/00)

Assignment for the week of April 10. On Monday the 10th, we will continue our discussion of the relationship between political liberalism and the economic approach. Then, we will begin discussing nonliberal critiques of law and economics, beginning with paternalism. The key reading here is Duncan Kennedy's Distributive and Paternalist Motives in Contract and Tort Law.

Then, on Wednesday the 12th, after finishing leftover material, we will consider a sociological critique of the economic approach, illustrated by Robert Ellickson's Of Coase and Cattle, and a radical critique, illustrated by the excerpt from Mark Kelman's book, A Guide to Critical Legal Studies. The excerpt from Morton Horwitz's Law and Economics: Science or Politics? is intended as a secondary reading. (Posted 4/05/00)

Assignment for the week of April 3. On Monday the 3d, I will offer an general outline of the course to date, and then suggest a review problem that brings into play all the economic concepts we have covered so far. Then we will move on to the next main section of the course, critiquing the economic approach as a whole. We will start by reconsidering the merits of the efficiency norm, focusing on Posner's article, The Ethical and Political Basis of Wealth Maximization [in the course supplement].

Then, on Wednesday the 5th, we will consider two critiques of Posner's claims and of the efficiency norm generally. The first is an internal critique, from within economics. The second is a external critique, from the viewpoint of rights-oriented liberalism. The key readings here are Dworkin's Is Wealth a Value? and Ackerman's Talking and Trading [the latter in the course supplement]. (Posted 3/31/00)

Assignment for the week of March 27. On Monday the 27th, I will finish laying out the basic economic theory of information, and then we will discuss applications in legal procedure, contracts and products liability. The key background readings are Stigler and Akerlof; the key readings for classroom discussion are Bishop, Grossman, and the Evra case.

On Wednesday the 29th, after finishing leftover material, we will take up the materials on bounded rationality. The key background readings are Simon and Kahneman/Tversky. In class discussion, we will focus on the Schwartz/Wilde article on consumer contracts, together with Williams v. Walker-Thomas case.

On Friday the 31st, we will have a makeup class. The focus will be on applications of bounded rationality, including Jackson on bankruptcy and Noll/Krier on regulatory policy. I will also hand out a practice assignment that is intended to review and integrate the analytical material from previous weeks.

The schedule for the remainder of the term is as follows. More detailed assignments will be announced from week to week.

April 3 Critiques of the economic approach
April 5 Internal and liberal critiques
April 10 The paternalist critique
April 12 Radical and sociological critiques
April 17 Communitarian critiques
April 19 Application: the market and the family
April 24 Markets for marriage, divorce and adoption
(Posted 3/08/00)

Assignment for the week of March 20. On Monday the 20th, we will discuss applications of the economic theory of risk and uncertainty, focusing on tort and contract. On tort, the key reading is Hanson/Logue, on contract, the key reading is Posner and Rosenfield. We will use the case of Taylor v Caldwell as an example in discussion.

On Wednesday the 22d, after finishing leftover material, we will take up the Kaplow article on legal transitions, and then move to the economics of information, where the key readings are Stigler and Akerlof. (Posted 3/08/00)

Assignment for the week of March 6. On Monday the 6th, we will complete our discussion of strategic behavior in litigation, focusing on the Shavell/Rosenberg article on frivolous lawsuits. You should consider what policies could be undertaken to reduce the costs of such lawsuits, either by the court system or by the defendant. Then we will take up the next topic on the syallabus, risk and uncertainty. The key readings here are Shavell and Hanson/Logue.

Remember that we will not meet on Wednesday the 8th; instead, that class has been rescheduled for Friday, March 31. (Posted 3/03/00)

Assignment for the week of February 28.   On Monday the 28th, we will take up the economic approach to criminal law and punishment. You should read the Becker and Polinsky excerpts in the reader. In class discussion we will also consider an issue not explicitly discussed in the readings but implicit in Polinsky's arguments, namely: whether there is any economic justification for criminal liability at all, given the availability of punitive damages in tort.

On Wednesday, March 1, we will take up the economic model of strategic behavior and some of its applications in law. If you have not done so already, you should read Cooter on "The Cost of Coase," and Cooter, Marks, and Mnookin on "Bargaining in the Shadow of the Law." In class discussion, we will compare the problems of strategic behavior in the private contractual setting [following Cooter] and in the litigation setting [following Leff and Shavell/Rosenberg]. We will not discuss the Katz or Hart readings in class, though the Hart reading is useful background in light of our earlier discussion of the effect of property rules on private investment. (Posted 2/24/00)

Assignment for the week of February 21.   On Monday the 21st, we will continue our discusssion of the economics of contracts. After finishing our discussion of efficient breach, we will turn to the subject of remedies for breach. For concreteness, we will focus on the case of Groves v Wunder. Those of you that studied the case of Peevyhouse v Garland Coal in your contracts class may also find it helpful to recall that case.

On Wednesday the 23rd, after finishing leftover material, we will turn to the economic approach to criminal law and punishment. You should read the Becker and Polinsky excerpts in the reader, along with associated notes. You may treat the Posner excerpt on legal procedure as optional background material. (Posted 2/16/00)

Assignment for the week of February 14.   On Monday the 14th, we will turn to the subject of torts, focusing on the topic of the standard for liability. The keys readings are the excerpt from Judge Posner's torts casebook on the Learned Hand formula; and on Shavell's article, "Strict Liability Versus Negligence." As concrete examples, we will consider the Carroll Towing and TJ Hooper cases, which you probably read in your first-year torts class.

On Wednesday the 9th, after finishing leftover material, we will begin our discussion of contract law. The focus will be on the concept of efficient breach and on remedial structures that promote it. On efficient breach, the key readings are Shavell and D. Friedmann [both in the supplement]. On remedies, the key reading is Ulen [in the reader]. For concreteness, we will focus on the case of Groves v Wunder [in the supplement] This discussion will carry over to the following week. (Posted 2/09/00)

Assignment for the week of February 7.   On Monday the 7th, we will finish section IIB [comparing the models of cooperation and market failure], and have our discussion of the Hoffman and Spitzer article. The study questions can be found below, under last week's assignment. Then we will turn to the applications chapter, and begin discussing Demsetz on property, and Calabresi and Melamed on property and liability rules. When reading Calabresi and Melamed, you should ask yourself: what is the difference between a property and liability rule [1] in a "Coasian" world of zero transaction costs; and [2] in a "non-Coasian" world with significant transaction costs. As concrete examples, we will consider the Boomer and Del Webb cases, which you probably read in your first-year property classes.

On Wednesday the 9th, we will continue the discussion of the economics of property, and then turn to tort. The focus will be on the excerpt from Judge Posner's torts casebook on the Learned Hand formula; and on Shavell's article, "Strict Liability Versus Negligence." As concrete examples, we will consider the Carroll Towing and TJ Hooper cases, which you probably read in your first-year torts class. This discussion will carry over to the following week.

You should note that I have posted an interesting student question on the Coase theorem [along with my comments] on the discussion page of this website. (Posted 2/03/00)

Assignment for the week of January 31.   On Monday the 31st, we will complete our discussion of section II.A. [the model of market failure] and begin section II.B [the model of cooperation]. The focus will be on Coase's critique of the model of market failure, and on the "Coase theorem." In class discussion, we will consider whether or not the Coase theorem [or Coase's arguments that legal rules are allocationally neutral] are persuasive in the farmer-rancher setting he describes.

Then on Wednesday, February 2d, we will take up the more general question of how the two models can usefully be compared, and how we might decide which is more helpful in any given setting. The discussion will focus on the article by Elizabeth Hoffman and Matthew Spitzer that appears in the supplement. You should consider [and be prepared to discuss] whether or not Hoffman and Spitzer's experiments provide a good test of the Coase theorem, and additionally, to what extent we can draw inferences from the behavior of their experimental subjects to the world outside the laboratory. (Posted 1/27/00)

Assignment for the week of January 24.   On Monday the 24th, we will complete our introduction to the normative principles of economics, and then discuss the methodological excerpts by Friedman and Blaug listed under section I.C. in the reader. In particular, the Friedman essay has been very influential among economists [especially those aligned with the Chicago school] and we will spend some class time discussing it.

Then on Wednesday the 26th, we will begin the next section of the syllabus, entitled "Two competing economic models of law." You should read the introduction to chapter 2 in the reader, and the excerpts from Calabresi and Cooter. The Calabresi article is arguably one of the two articles that got law and economics started [the other being Coase's "The Problem of Social Cost," which we will take up the following week. In my view, however, in order to make sense of Coase it is necessary to start with the traditional economic model of market failure that he is criticizing.] The Cooter article updates and elaborates Calabresi's basic approach.

In studying Calabresi's article, you should make sure to read and think about the questions posed in note 1 at p. 78 of the reader. We will take them up in class. (Posted 1/19/00)

Assignment for the week of January 17.   We will not meet on Monday the 17th due to the observance of Martin Luther King Jr. Day. On Wednesday the 19th, we will discuss the normative underpinnings of the economic approach. The assigned reading is part I.C. of the syllabus, and the associated notes and questions in the reader. Our focus will be on the concept of economic efficiency in its various forms, and on the pragmatic merits of its use by lawyers. (Posted 1/12/00)

Assignment for the first day of class. The required text is my reader, Foundations of the Economic Analysis of Law, along with a supplementary coursepack. For the first class meeting on Monday, January 10, please pick up a copy of the reader and coursepack, and read the Posner and Leff articles assigned under section I.A of the course outline ("Introduction to the Economic Approach."). For Wednesday, January 12, please read and be prepared to discuss the Becker article assigned under section I.B of the outline ("Behavioral Premises"). (Posted 1/3/00)