Category Archives: Law and Economics

‘“A Major New Move” in Contract Interpretation’

Omri Ben-Shahar and Lior Strahilevitz, Interpreting Contracts via Surveys and Experiments, University of Chicago Coase-Sandor Institute for Law and Economics Research Paper No 791 (2017), available at SSRN. Despite its practical importance, contract interpretation is the red-haired stepchild of the 1L classroom – the doctrine is infamously incoherent, rests on law/fact distinctions which even the […]

Zamir and Medina, ‘Deontological Morality and Economic Analysis of Law’

Abstract Welfare economics – the normative branch of economics – is a consequentialist moral theory. Unlike deontological morality, at least in its basic form it attributes no intrinsic value to prohibitions on active or intentional harming of other people, lying, or promise breaking, and does not allow people to prioritize their own interests over the […]

Choi, Gulati and Scott, ‘Variation in Boilerplate: Rational Design or Random Mutation?’

Abstract Standard contract doctrine presumes that sophisticated contracting parties choose their terminology carefully because they want courts or counterparts to understand the precise meaning they intend to convey. The implication of this ‘rational design’ model of commercial contracting behavior is that courts should pay close attention to the plain or ordinary meaning of the language […]

Yock Lin Tan, ‘Property in bribes revisited in a cross-disciplinary perspective’

Abstract Taking its point of departure from the decision of the United Kingdom Supreme Court in FHR European Ventures, this article seeks to bring cross-disciplinary perspectives to bear on the question whether an agent should hold the bribe he has received on constructive trust for his principal. Economising models are employed and the results interpreted […]

Levmore and Fagan, ‘The End of Bargaining in the Digital Age’

Abstract Bargaining is a fundamental characteristic of many markets and legal disputes, but it can be a source of inefficiency. Buyers often waste resources by searching for information about past prices, where a seller already holds that information. A second – and novel – source of social loss is that some buyers will avoid otherwise […]

Guttel, Harel and Lavie, ‘Torts for Non-Victims: The Case for Third-Party Litigation’

Abstract Under the law, the power to sue and collect damages is granted exclusively to victims, namely, to those who can show that their interests were set back by others’ behavior. By contrast, the law is much more generous in identifying defendants. A defendant can be liable for no reason other than that she is […]

Keith Hylton, ‘Deterrence and Aggregate Litigation’

Abstract This paper examines the deterrence properties of aggregate litigation and class actions, with an emphasis on positive value claims. In the multiple victim scenario with positive value claims, in the absence of the class action device, the probability that an individual victim will bring suit falls toward zero with geometric decay as the number […]

Chapin Cimino, ‘Doing Deals with Aristotle – Today’

Abstract This analysis proceeds in six steps. In Part I, this Article sets the stage by describing the problem: while contracting behavior is increasingly complex, contract law and theory remain stubbornly uni-faceted. That is, while contracting and contractors are ever more modern, contract law and theory are ever more traditional. The greater the divide, the […]

Carmine Guerriero, ‘Property Rights, Transaction Costs, and the Limits of the Market’

Abstract Although the relevance of property rights and transaction costs for trade and innovation are well-known, we still lack a formal framework to think about their origins and interplay. Within trade interactions, fully protecting the original owners’ property implies that some high-valuation potential buyers inefficiently refuse to buy it because of transaction costs. When instead […]

Bourgeon and Picard, ‘Nitpicky Insurers and the Law of Contracts’

Abstract The standard economic analysis of the insured-insurer relationship under moral hazard postulates a simplistic setup that hardly explains the many features of an insurance contract. We extend this setup to include the situation that the insured was facing at the time of the accident and the circumstances of the loss. We show that if […]