Abstract:
In ‘Getting Incentives Right’, Bob Cooter and Ariel Porat argue that tort law, contract law, and even the law of restitution can be improved by paying better attention to parties’ incentives. If we fine-tune the incentives that private law provides, then actors will behave in a more optimal way, which will, in turn, increase total social welfare. In making this claim, Cooter and Porat represent the main stream in an important movement — the law and economics movement. The movement’s tradition of optimism about the ability of the law, and particularly private law, to produce better behavior is what guides Cooter and Portat’s work in ‘Getting Incentives Right’.
Standing on the shoulders of giants, Cooter and Porat’s wonderful book continues this tradition by further fine-tuning private law so that it provides even better incentives for actors to engage in optimal behavior than those previously prescribed by scholars.
Because their commitment is to the theoretical ideal of making the world better, Cooter and Porat have no problem — in fact they take pride in — crashing traditional legal structures that have been in use for centuries. As a result, their prescriptions are not always acceptable to courts. Indeed, the belief in the ability to better fine-tune actors’ incentives is the strength of the book, but also, as I show inside, its weakness. This is because the book places a high level of demands on courts and relevant actors. Yet, these demands are perhaps too high to meet.
Avraham, Ronen, Decoding Cooter and Porat: A Discussion of Getting Incentives Right (March 1, 2016). Jerusalem Review of Legal Studies, Vol 12, No 1 (2015), pp 183–201; U of Texas Law, Law and Econ Research Paper No E561.
First posted 2016-03-07 16:22:13
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