1101994

Professor of law and economics, Ph.D. Henrik Lando, CBS

Professor, dr. philos, J.S.D. Gunnar Nordén, USN

Target group
The course is designed for Ph.D. students in law who wish to draw inspiration from theories of law and economics, and/or to include a law and economics perspective in their thesis. The course is open to all Nordic Ph.D. students of law. 

Before the course:

Participants are encouraged to:

1. Study the required readings above
2. Formulate their basic research questions. It is for this purpose that students should read `The Craft of Research´; this text will not be explained but its ideas are likely to become clear when we discuss the research questions.   
3. Formulate, for the normative part of the research question, which normative framework is more suitable for addressing it

The participants should send their research questions and their reflections concerning the normative framework even if unfinished, to hl.law@cbs.dk two weeks before the course. If this proves difficult, please contact us.

The course aims to introduce students to functional analysis of law and to normative frameworks that can be applied when understanding, predicting or assessing law. The course aims to throw light on the students’ own research questions.

Functional analysis and normative frameworks in the study of law

Day 1: November 19, 2020

The morning sessions of the first day introduce basic concepts from the functional analysis of law, in particular game theory. Core references are Analytical methods for lawyers chapter 2, p. 34-117. (Chapter 1 should be read but will not be addressed in class), and Shavell’s book on accident law.

The purpose is to acquaint the student with the concept of Nash-equilibrium, prisoner’s dilemma, moral hazard, adverse selection, basic theory of bargaining, and elements of contract theory. The theory and the concepts will be applied to tort law.

Morning session: 9.00 am - 10.45:

-Course Introduction HL

-Short student presentations of positive and normative questions involved in their Ph.D. projects

-Introduction to the model of legal argumentation and the functional analysis of law  GN

11 am  – 12.00 pm:

On the basic-game theoretic building blocks of conditional normative legal analysis: The rules of the game, preferences, strategies and equilibrium concepts  HL

12.15 pm – 1 pm:

Nash-equilibrium, the prisoner’s dilemma (table 2-2 in Analytical methods for lawyer), and the litigation game (p. 34-50 in Analytical methods for lawyers). We discuss a set of problems in the litigation game, handed-out in class. HL,GN

2 – 2.45 pm:

Functional analysis of tort law GN

- interpreting and understanding tort rules, including the negligence rule and strict liability

- designing tort law

- assessing regulation through efficiency criteria and cost-benefit analysis

Reading: Shavell, Ch. 1-4.

3 – 4 pm:

Exercises in tort law. HL,GN

A problem set will be handed out and solutions discussed in class.

Links to property and contract law will be suggested, and the Coase theorem will be introduced.

Suggested reading: Calabresi & Melamed

Day 2, November 20,  2020

Morning session: 9 –9.45 am:

Contract Law: Worked Example [Question 1—4] GN, HL                     

Reading: Lando & Nordén

10  – 10.45 am:                

General discussion of efficiency concepts and their application to law    HL

1. a) Pareto-efficiency
2. b) Kaldor–Hicks-efficiency

11 am – 12.45 pm:

On social welfare functions, the utilitarian optimum and its application in the various fields of law  HL

1. The definition of the social welfare function
2. The definition of the utilitarian optimum, and its revival due to Harsanyi and Hare
3. On Alf Ross’ criticism of the social welfare function and of utilitarianism
4. The Arrow impossibility theorem and its relevance to the use of social welfare functions in the analysis of law

Reading: Alf Ross and the functional analysis of law

2 pm – 2.45 pm:

Discussion of the application of functional analysis and/or normative frameworks in the Ph.D. projects HL,GN

3 pm – 4 pm:
Summary and plenum discussion

Teaching aims are to enable the student to:

• formulate research questions using the theory of rational choice.  
• understand law and legal science in the light of this theory.
• understand the methodology of law and economics and its core ideas.
• use analytical tools developed within economics.

1. Analytical Methods for Lawyers, by Jackson, Kaplow, Shavell, et al. Foundation Press, 2003. Chapter 1-3, 6.5 – 6.8, 
   
   
2. Economic analysis of accident law, Steven Shavell, chapter 1-4 in Foundations of the economic analysis of law: https://www.fd.unl.pt/docentes_docs/ma/LTF_MA_24338.pdf,
   
   
3. A note on the Coase theorem, Henrik Lando and Gunnar Nordén
   
   
4. The Craft of Research, by Booth, Colomb and Williams. Chapter 1-10 (inclusive), mainly 2-10.
   
   
5. Alf Ross and the functional analysis of law, Henrik Lando
   
   
6. Foundations of the economic analysis of law, Steven Shavell: The introduction from https://www.fd.unl.pt/docentes_docs/ma/LTF_MA_24338.pdf above, and chapter 26 in http://www.nber.org/papers/w9700.pdf

Supplementary reading (not required):

1. An Introduction to Law and Economics, Mitch Polinsky.
   
   
2. Calabresi, G. and D. Melamed. 1972. Property rules, liability rules, and inalienability: one view of the cathedral. Harvard Law Review 85(6), 1089–128.
   
   
3. Foundations of the economic analysis of law, Steven Shavell