Category Archives: Law and Economics
Gilbert and Hayashi, ‘Altruism and Coasean Bargaining’
ABSTRACT We introduce altruism into standard models of bargaining and explore its implications for the Coase Theorem. A strict interpretation of the Coase Theorem holds in the presence of pure altruism, but it fails when agents have impure altruism. Both pure and impure altruism also generally prevent private bargaining from achieving an efficient allocation of […]
Habib, Mavroidis and Ziegler, ‘Settlement Quality in Adversarial and Inquisitorial Systems’
ABSTRACT Parties in a court case naturally bias the information they provide to the court towards their own interests. We investigate the consequences for settlement quality of a key difference between inquisitorial systems (IS) and adversarial systems (AS), specifically that the judge has more power to limit the parties’ biases in IS. Under symmetry, AS […]
Rebecca Zeilstra, ‘Formal Legality for Nudges’
ABSTRACT Nudges are small psychological prompts that steer behavior in a noncoercive way. For example, low-calorie products can be placed at eye level to encourage people to eat healthier. This article argues that governmental nudges are in tension with Fuller’s formal legality principle, according to which regulation should meet requirements such as generality and promulgation. […]
Syed and Bracha, ‘A Law and Political Economy of Intellectual Property’
ABSTRACT Theories of intellectual property (IP) tend to come in two varieties: ‘normative’ theories that concern themselves with justifying (or not) IP rights, and ‘positive’ theories that focus on explaining the effects of such rights. Yet the distinction between these is far from airtight, since a positive analysis of effects is surely germane to many […]
Luppi and Parisi, ‘The Economics of Evolutionary Programming’
ABSTRACT In this paper, we present an economic model of evolutionary computation technologies, highlighting how alternative propertization and liability mechanisms shape the balance between ‘exploration’ and ‘exploitation’ in evolutionary research. We consider two interrelated effects of evolutionary experimentation: (i) the positive externalities that occur when superior mutations enhance performance, benefitting all subsequent implementations of the […]
Victor Paul Goldberg, ‘On Consequential Damages’
ABSTRACT The paper considers the line between direct damages and consequential damages. Noting that language excluding recovery for consequential damages is common, it then asks why rational parties might choose to exclude such damages. Since the legal rule is only a default rule, it then considers a puzzle. Why, when the default rule is unclear […]
Luigi Alberto Franzoni, ‘Efficient Liability Law with Costly Insurance’
ABSTRACT This paper examines the impact of insurance on the liability system, building on the realistic assumption that parties are risk-averse and that private insurance is costly. These factors increase the value of precaution for the parties involved. Under a negligence rule, risk aversion and the high cost of insurance justify raising the standard of […]
Schwartz and Sepe, ‘Deregulating Contracts’
ABSTRACT A contract’s substantive terms specify what the parties will trade; a contract’s procedural terms regulate the parties’ bargain. Quantity and quality terms are substantive; damage, interpretive and modification terms are procedural. Parties are free, under contract law, to specify substantive terms; but they are not free to specify procedural terms. Rather, courts regulate damages […]
Schroeder and Carlson, ‘Property and Information’
ABSTRACT One of the significant contributions to modern private law is the information cost theory of property expounded by Professor Henry E Smith. This theory is derived from the Coase Theorem and is designed to explain why the economy is organized by property concepts (most basically by the right to exclude others), as opposed to […]
Procaccia and Zamir, ‘The Missing Remedy: Restoration Damages for Dark Patterns and Other Precontractual Manipulations’
ABSTRACT Manipulation in contractual negotiations – whether through deception, undue pressure, marketing ploys, or digital ‘dark patterns’ – undermines bargaining integrity and distorts the terms of the resulting contract. Courts recognize these tactics as wrongful, yet existing remedies often fail to provide adequate redress. The prevailing approaches – compensating victims for out-of-pocket losses or the […]