Category Archives: Law and Economics

Givati and Kaplan, ‘Harm Displacement and Tort Doctrine’

ABSTRACT A large literature in law and economics analyzes the phenomenon of crime displacement and its implications for criminal law. Yet a similar phenomenon of harm displacement in the tort context has been ignored by scholars. We develop a simple model of bilateral accidents which allows for harm to be displaced by the victim. We […]

Bar-Gill and Engel, ‘Property is Dummy Proof: An Experiment’

ABSTRACT Law is for humans. Humans suffer from cognitive limitations. Legal institutions can help humans by making these limitations irrelevant. This experiment shows that strong property rights serve this function. In theory, efficient outcomes obtain even without strong property rights. In a hypothetical world where cognitive ability is perfect, individuals would not engage in wasteful […]

Bradford, Chang, Chilton and Garoupa, ‘Do Legal Origins Predict Legal Substance?’

ABSTRACT There is a large literature in economics and law suggesting that countries’ legal origins – whether a country’s legal regime was based on British common law or German, French, or Nordic civil law – profoundly impact a range of outcomes. However, the exact relationship between legal origins and legal substance has been disputed in […]

Daniel Sokol, ‘Rethinking the Efficiency of the Common Law’

ABSTRACT This Article shows how Posner and other scholars who claimed that common law was efficient misunderstood the structure of common law. If common law was more efficient, there would have been a noticeable push across most, if not all, doctrines to greater efficiency. This has not been the case. Rather, common law, better recast […]

‘Van Horn discusses the legacy of corporate funding for the “Chicago School” of law & economics (Michael Simkovic)’

“Pro-market, a blog at the Stigler Center at the University of Chicago Booth School of Business, recently published a retrospective by Robert Van Horn discussing the early financial and intellectual ties between the Chicago school of law and economics and powerful corporate interests, and the controversy such ties engendered. The University of Chicago’s work on […]

Shmuel Leshem, ‘Allocation of Liability: On the Efficiency of Composite Sharing Rules’

ABSTRACT Distributing liability according to injurers’ relative fault produces incentives for rent-seeking (excessive care) or free-riding (insufficient care) if precautions are complements or substitutes. We show that composite sharing rules consisting of different weights of proportional and equal allocations calibrate injurers’ incentives. The optimal weight of the proportional relative to the equal allocation increases with […]

Ouellette and Tutt, ‘How Do Patent Incentives Affect University Researchers?’

ABSTRACT Universities and other beneficiaries of public funding for scientific research are encouraged to patent resulting inventions under the Bayh–Dole Act. This controversial framework gives academic grant recipients a direct financial stake in the success of their inventions by requiring universities to share the resulting patent royalties with inventors. This incentive for grant recipients might […]

Faillo, Rizzolli and Tontrup, ‘Thou Shalt Not Steal. Taking Aversion with Legal Property Claims’

ABSTRACT Some recent experimental literature on the taking game (a variation of the dictator game) suggests that human subjects may generally be taking averse, implying that the moral cost of taking exceeds the moral cost of not giving. In our experiment, our subjects could decide to take tangible objects (lottery scratchcards) brought from outside the […]

Mittlaender and Buskens, ‘Retaliation, Remedies, and Contracts’

ABSTRACT Contracts commit individuals to a future course of action and create feelings of entitlement on the parties. In a contractual gap, parties’ duties and rights are not univocal, and while promisors will often feel entitled to breach, promisees will feel entitled to receive the promised performance. This divergence leads to disputes, aggrievement, and retaliatory […]

Omer Pelled, ‘The Proportional Internalization Principle in Private Law’

ABSTRACT According to common conception, laws should make actors internalize all the costs and benefits of their actions to make them behave efficiently. This article shows that even when only partial internalization is possible, private law can create efficient incentives by ensuring that each actor internalizes an identical proportion of the costs and benefits. This […]