Category Archives: Law and Economics
‘The Evaluative Emptiness of the Economic Approach to Law’
Law & economics traces its intellectual roots to the University of Chicago. That lineage still shapes how the field is understood. Chicago price theory – especially Gary Becker’s (1976) systematic application of maximization, equilibrium, and stable preferences across social life, and George Stigler’s (1992, p 459) suggestion that ‘every durable social institution or practice is […]
Sarath Sanga, ‘The LPE Critique of Law and Economics’
ABSTRACT The law and political economy (LPE) critique of law and economics offers a clarion call reminding us that methods are never just methods. They are vantage points on power that affect what we see and what we overlook. The LPE critique insists that economics is not a neutral science and that the law and […]
Davidson and Simonson, ‘Expanding Sources of Knowledge in Legal Scholarship’
ABSTRACT Do police help keep us safe? Do prisons make the world less violent? This Essay argues that effectively engaging with these and other notoriously difficult questions about our criminal legal system requires a diverse suite of methodologies. Too often, however, scholars have purported to answer these questions definitively by reference only to top-down, state-created, […]
Stephen Lewarne, ‘When Contracts Do Not Bind: Money, Institutional Volatility, and the Unit of Account’
ABSTRACT Nominal contracts are typically assumed to bind whenever trade occurs. This paper shows that nominal contracts may fail to bind in equilibrium even in the absence of inflation volatility, liquidity shortages, or price rigidities, once enforceability becomes state contingent. The mechanism operates through the credibility of the unit of account, which is modeled as […]
Chilton, Macey and Versteeg, ‘Contemporary Law and Economics’
ABSTRACT When law and economics (L&E) emerged as a field in the middle of the twentieth century, it focused on using economic theory to study the common law. During this period, L&E offered insights so novel that it not only profoundly influenced legal doctrine, but the movement’s key figures also became some of the most […]
Lu and Garoupa, ‘Judicial Interest Rates: Strategic Considerations’
ABSTRACT The appropriate method for determining the judicial interest rate remains unsettled. This article contributes to the debate by presenting a model that accounts for the complexities of party incentives and strategic delays in litigation. Additionally, we provide a rational explanation for the widespread use of a party-independent interest rate in many jurisdictions. When a […]
Steven Shavell, ‘Settlement of Litigation May Increase or Decrease Deterrence and Social Welfare’
ABSTRACT Although the obvious effect of settlement is to save litigants the costs of trial, settlement also influences deterrence – and for two reasons. First, because settlement is agreed upon by plaintiffs, it raises their expected return from litigation and thus the probability of suit. This augments deterrence. Second, because settlement is agreed upon by […]
Aggarwal and Feibelman, ‘Defining the Field of Law and Macroeconomics: A Framework from International Monetary Law’
ABSTRACT This Article proposes an analytical framework for defining the contours of the emerging field of law and macroeconomics drawing on the International Monetary Fund’s principle of ‘macro-criticality’. Such a framework can help steer scholarly debate toward a clearer understanding of the relationship between law and the economy and inform policymaking within that domain. In […]
Bao, Dukes and Xiao, ‘Puffery as Occlusion: A Story of Rational Inattention’
ABSTRACT We ask whether non-persuasive puffery can affect purchase decisions. This question is motivated by legal strategies that are used by marketers accused of false advertising and rely on a presumption that consumers dismiss puffery as sales bluster. But if consumers dismiss puffery, then why is it such a staple of marketing communication? In contrast […]
Kim, Kim and Park, ‘The Liability Gap in Sequential Accidents: Why and When Standard Tort Rules Fail’
ABSTRACT When a primary event creates potential harm that victims can mitigate, a liability gap arises under negligence: firms pay only residual harm, not victims’ mitigation costs. This gap causes firms to underinvest in precaution and victims to underprotect – and paradoxically widens as victims become more effective. The gap also distorts ex post monitoring: […]