Category Archives: Law and Economics

‘Holmesian “bad man theory” and law & economics’

“Although it’s not directly on point, Rob’s question called to mind my essay Law and Economics: An Apologia, in Christian Perspectives on Legal Thought, in which I posited that: ‘[Some might argue that] theological insights on human nature lead to different behavioral predictions than those premised on Economic Man. But is that necessarily true? Consider […]

Davis and Marotta-Wurgler, ‘Contracting for Personal Data’

ABSTRACT Is contracting for the collection, use, and transfer of data like contracting for the sale of a horse or a car or licensing a piece of software? Many are concerned that conventional principles of contract law are inadequate when some consumers may not know or misperceive the full consequences of their transactions. Such concerns […]

Susheng Wang, ‘Theory of Agreements’

ABSTRACT Business partners often start their cooperation with a loose and nonbinding agreement, and subsequently replace it by a strict and binding contract. This paper is the first to analyze such agreements extensively. We identify the role of information, incentives, uncertainty and expectation errors in agreements. We show that an agreement is the most efficient […]

Kraus and Scott, ‘The Case Against Equity in American Contract Law’

ABSTRACT The American common law of contracts appears to direct courts to decide contract disputes by considering two opposing points of view: the ex ante perspective of the parties’ intent at the time of formation, and the ex post perspective of justice and fairness to the parties at the time of adjudication. Despite the black […]

Benjamin McMichael, ‘Shifting Liability with Licensing: An Empirical Analysis of Medical Malpractice and Scope-of-Practice Laws’

ABSTRACT Medical malpractice liability plays an important role in the healthcare system, as evidenced by the many studies finding that changes in malpractice liability risk induce changes in the delivery and consumption of care. Importantly, the effect of malpractice liability depends on who is held liable, and recent developments in the healthcare system have clouded […]

Ejan Mackaay, ‘Some Law and Economics of the Class Action’

ABSTRACT Class actions aim to bring economies of scale to bear on legal proceedings, by joining cases that have a common cause of action against a common defendant into a single lawsuit leading to a judgment or settlement that binds the entire class. Legal procedures, lawyer time, evidence by experts and court resources are thus […]

Eenmaa-Dimitrieva and Schmidt-Kessen, ‘Smart Contracts: Reducing Risks in Economic Exchange with No-Party Trust?’

ABSTRACT Our study on smart contracts, self-executing agreements based on blockchain technology, can be placed in the field of inquiry within law and economics of contracts which explores new modes of contract enforcement as sources of market creation. We lay the foundations by characterising contract enforcement and trust mechanisms underlying contracts. Considering that trust reduces […]

‘Does IP boost the European economy? EPO and EUIPO say so’

“Hot off the press is a joint report by the European Patent Office (EPO) and European Union Intellectual Property Office (EUIPO) entitled IPR-intensive industries and economic performance in the European Union. Now in its third edition, the findings remain consistent with earlier versions (from 2013 and 2016): according to the header on the EUIPO Observatory’s […]

Bruce Chapman, ‘Moral Consensus, Rights and Efficiency in the Economic Analysis of Law’

ABSTRACT The primary value that grounds the determination of rights within economic analysis of law is Kaldor–Hicks efficiency. This is a value that, while it claims a Paretian pedigree, can, if pursued systematically and without qualification, lead to an outcome where everyone in some society or some organisation is worse off than they might otherwise […]

‘Legal Theory Lexicon: Social Welfare Functions’

“One of the key ideas in contemporary economic theory in general and law and economics in particular is the social welfare function. Law students without a background in economics might be put off by the fact that social welfare functions are expressed in mathematical notation, but there is no reason to be intimidated. The basic […]