Economics 522: Economics of Law
Fall 2009
Dan Quint
Professor: Dan Quint
7428
(608) 263-2515
Office Hours: Wednesdays,
1:30-3:30 p.m.
TA: Chao
He
TA Office Hrs: Mondays, 11
a.m.-1 p.m., 7231 Social Science
Class website: http://www.ssc.wisc.edu/~dquint/econ522
Lectures: Tuesdays
and Thursdays, 11:00 a.m.-12:15 p.m., Ingraham 19
Final Exam: Thursday,
December 17, 10:05 a.m.-12:05 p.m., location TBA
Grades: Grades will be based on occasional
problem sets (20%); two in-class midterms tentatively scheduled for October 13 and
November 5 (20% each); and a final exam on December 17 (40%).
The
bit of game theory I’ll use should be covered in whatever textbook you used for
Econ 301 – I’ve listed the chapters in Intermediate
Microeconomics: A Modern Approach by Hal Varian
(W. W. Norton 2005).
The
papers listed on the outline below are all available online. Most are
listed with links through JSTOR, which requires a subscription and therefore
may only work from on-campus computers. The rest have been placed on
electronic reserve at https://www.library.wisc.edu/course-pages/viewer/show/1713
– please let me know if you have any problem accessing them.
Another
excellent book on law and economics is Law’s
Order, by David Friedman (Princeton University Press 2001). I will refer to this book several times in
lecture; you can think of it as an optional text for the course. It’s much less comprehensive than the
textbook, but covers the intuition of what’s going on very well. (It’s also quite funny in places.) It’s available for free online as an e-book
at http://www.daviddfriedman.com/laws_order/index.shtml
Other
Sources: Other good books on law and economics include An
Introduction to Law and Economics, by Mitchell Polinsky
(Aspen 2003), and Game
Theory and the Law, by Douglas Baird, Robert Gertner,
and Randal Picker (Harvard University Press 1998).
Throughout
this course, we’ll be assuming that peoples’ behavior responds to the law. An interesting counterpoint is the view that
it is often not the formal law, but informal social norms, which actually
govern peoples’ behavior. We won’t get
into this, but if you’re interested, check out Order
without Law: How Neighbors Settle Disputes, by Robert Ellickson
(Harvard University Press 2005); and for an example of such norms in action,
see Daniel Nazer (2004), “The Tragicomedy of the
Surfers’ Commons,” Deakin Law Review 29 (link).
At the
end of the semester, we’ll discuss behavioral economics and its interaction
with the law. The paper listed on the
syllabus (by Jolls, Sunstein
and Thaler) is a good starting point; if you want
more, check out Behavioral
Law and Economics, edited by Cass Sunstein
(Cambridge University Press 2000).
Course Overview and
INTRODUCTORY MATERIAL
Thurs 9/3 Course overview, a bit of history (the
Common and Civil Law traditions)
* Cooter and Ulen ch 3
Robert
Ellickson (1989), “A Hypothesis of Wealth-Maximizing
Norms: Evidence from the Whaling Industry,” Journal of Law, Economics and
Organization 83 (link)
Tues 9/8 Efficiency, should the law be
efficient?, introduction to theory of static games
* Cooter and Ulen ch 1, ch
2
*
Richard Posner (1980), “The Ethical and Political Basis of Efficiency Norm in
Common Law Adjudication,” Hofstra Law Review 8 (link to
online reserve)
Peter
Hammond (1982), “Review: The Economics of Justice and the Criterion of Wealth
Maximization,” Yale Law Journal 7 (link)
Varian
ch 28.1 – 28.4
ECONOMICS OF PROPERTY LAW
Thurs 9/10, Tues 9/15, Thurs
9/17, Tues 9/22, Thurs 9/24, Tues 9/29
readings: * Cooter and Ulen ch 4 (theory) and ch 5
(applications)
*
Ronald H. Coase (1960), “The Problem of Social Cost,”
Journal of Law and Economics 3 (link)
Garrett
Hardin (1968), “The Tragedy of the Commons,” Science 162 (link)
Harold
Demsetz (1967), “Toward a Theory of Property Rights,”
American Economic Review 57 (link)
*
Guido Calabresi and A. Douglas Melamed
(1972), “Property Rules, Liability Rules, and Inalienability: One View of the
Cathedral,” Harvard Law Review 85 (link)
Lawrence
Blume and Daniel Rubinfeld
(1984), “Compensation for Takings: An Economic Analysis,” California Law Review
72 (link
to online reserve)
TUES 10/13 FIRST
MIDTERM
ECONOMICS OF CONTRACT LAW
Thurs 10/1, Tues 10/6, Thurs 10/8,
Thurs 10/15, Tues 10/20, Thurs 10/22
readings: * Cooter and Ulen ch 6 (theory) and 7 (applications)
* Ian Ayres and Robert Gertner
(1989), “Filling Gaps in Incomplete Contracts: An Economic Theory of Default
Rules,” Yale Law Journal 99 (link)
Hadley v Baxendale decision
(link)
THURS 11/5 SECOND
MIDTERM
ECONOMICS OF TORT LAW
Tues 10/27, Thurs 10/29, Tues
11/3, Tues 11/10, Thurs 11/12
readings: * Cooter
and Ulen ch 8 (theory) and
9 (applications)
* Steven Shavell (1980),
“Strict Liability versus Negligence,” Journal of Legal Studies 9 (link)
Gary Schwartz (1994), “Reality in the Economic
Analysis of Tort Law: Does Tort Law Really Deter?” UCLA Law Review 42 (link to
online reserve)
W. Kip Viscusi (1993), “The
Value of Risks to Life and Health,” Journal of Economic Literature 31 (link)
OTHER TOPICS
11/17, 11/19 The Legal Process
* Cooter
and Ulen ch 10
Kathryn Spier (1994),
“Pretrial Bargaining and the Design of Fee-Shifting Rules,” RAND Journal of
Economics 25 (link)
Thurs 11/26 No
class – Thanksgiving
11/24, 12/1 Economics
of Criminal Law
* Cooter and Ulen ch 11 and 12
*
David Friedman (2000), “Law’s Order,” Princeton University Press – chapter 15 (link to online ebook)
*
Gary Becker (1968), “Crime and Punishment: An Economic Approach,” Journal of
Political Economy 76 (link)
Isaac Ehrlich (1996), “Crime, Punishment, and the
Market for Offenses,” Journal of Economic Perspectives 10 (link)
Richard Craswell and John Calfee (1986), “Deterrence and Uncertain Legal Standards,”
Journal of Law, Economics and Organisation 2 (link)
(For examples of how efficient punishment
leads to an incentive for abuse, see here
and here.)
Thurs 12/3 Efficiency
of the Legal System, Revisited
Robert
Ellickson (1989), “A Hypothesis of Wealth-Maximizing
Norms: Evidence from the Whaling Industry,” Journal of Law, Economics and
Organization 83 (link)
* Gillian Hadfield (1992), “Bias in the Evolution of
Legal Rules,” Georgetown Law Journal 80 (link to
online reserve)
Tues 12/8 A Digression: Behavioral Law and Economics
Christine Jolls, Cass Sunstein, and Richard Thaler
(1998), “A Behavioral Approach to Law and Economics,” Stanford Law Review 50 (link)
Thurs 12/10 Review
Thurs 12/17 FINAL
EXAM
from the Economics
Department:
Grievance Procedure. The Department of Economics at UW-Madison has developed a grievance
procedure through which you may register
comments or complaints about a course, an
instructor, or a teaching assistant.
The Department continues to provide
a course evaluation each semester in every class. If you wish to make anonymous complaints to an
instructor or teaching assistant, the
appropriate vehicle is the course evaluation. If you have a disagreement with an instructor or a teaching assistant, we
strongly encourage you to try to
resolve the dispute with him or her directly. The grievance procedure is designed for
situations where neither of these
channels is appropriate.
If
you wish to file a grievance go to room 7238 in the
Your
name, address, telephone number and student ID number will not be revealed to
the instructor or teaching assistant involved and will be treated as
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