This course examines the efficacy of alternative legal arrangements using microeconomics as the basic investigative tool. The core of the course consists of a thorough analysis of the common law, with emphasis on the areas of tort, contract, property, and criminal law.
To analyze tort law, a microeconomic model of accidents is developed; using this model, the rules of caveat emptor, strict liability, negligence, and contributory negligence are compared for determination of causation, damages, activity levels, and accident risk. With a discussion on product liability, we will shift the topic to contract law, in which we will study the contracting process as well as the rational conditions for breach of contracts. Viewing the relationship between the government and its people as a social contract, we will study cases of eminent domain and discuss whether the government performs land acquisitions with “just compensation.” Lastly, we will analyze criminal law under a framework assuming that crime is a rational act (in some contexts). If time permits, we will study how different cost allocation rules influence litigation and settlement.
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