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Target group

The course is designed for PhD 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 PhD students of law. PhD students in economics are welcome as well.



Before the course, participants are required to:

1. Study the required readings above

2. Formulate their basic research questions, if they have not yet done so. 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. Also, the participants should formulate, for the main situation or game addressed by their research question:

- who the `players´ (the main actors) are
- what their preferences are (what are they trying to achieve?, are they risk averse or risk neutral?, do they care about fairness and if so, in what way?)
- what strategies the players can choose

The participants should send their research questions and the description of the game, even if unfinished, to hl.jur@cbs.dk three weeks before the course. If this proves difficult, please contact us.

Course Schedule: Day 1:

The morning sessions of the first day introduce basic concepts from game theory and from law and economics, based on mainly Analytical methods for lawyers chapter 2, p. 34-117. (Chapter 1 should be read but will not be addressed in class).

The purpose is to acquaint the student with game theory, including the concept of Nash- equilibrium, prisoner’s dilemma, moral hazard, adverse selection, basic theory of bargaining, and the theory of contracts.

Morning    sessions:   

9am – 9.45 am:

Nash-equilibrium, the prisoner’s dilemma (table 2-2), and the litigation game (p. 34-50). The theory is briefly explained; then we discuss a set of problems in the litigation game, handed-out in advance. This will be a group work, and one group shall briefly present its results in class. (Lecturer: HL)

10.00 – 10.45 am:

Moral hazard (p. 50-55) and Shavell, chapter 2. We discuss (in plenum) an example from Shavell’s textbook on tort law, (The economic theory of accident law, Chapter 2, page 5, table 3), which can be used to illustrate the role of hidden acts when discussing the shortcomings of the negligence rule). The example is also discussed in groups. (Lecturer: GN)

11.00 am – 11.45 am:

The first session of student presentations.  These sessions are organized as follows:
1.Each participants presents, in ten or fifteen minutes (dependent on attendance), his or her research question, and formulates also who the `players´ (the main actors) are, what their preferences are, and what strategies they can choose.
2.After each presentation we briefly discuss its game theoretic formulation, and the possibility of applying game theory to the main theme.

12 am – 1 pm:

Adverse selection, bargaining under asymmetric information and signaling/screening(p. 55- 62). A simple example of screening is analyzed in the context of insurance.  (Lecturer: HL)

Lunch 1pm – 2pm.

Afternoon sessions:

2 pm – 2.45 pm:

Second session of student presentations organized as described above.

3 pm – 3.45:

Contracting (p. 62- 117). The note on the Coase theorem (by HL) illustrating the Coase-theorem, is discussed in groups and in class.  (Lecturer GN).

6pm - ? Dinner in town, Place TBA

Day 2:

The second day introduces modern behavioral theories.

The following two articles (not required readings) will form the background of a presentation by HL of a new theory of interdependent preferences, and especially reciprocity.
1.Interdependent preferences and reciprocity, Joel Sobel, Journal of Economic Literature, Vol. XLIII (June 2005), pp. 392–436
2.Incorporating Fairness into Game Theory and Economics, Matthew Rabin, The American Economic Review, Vol. 83, No. 5 (Dec., 1993), pp. 1281-1302

Morning sessions:

9am – 9.45 am:

Modeling interdependent preferences. We go through some of the main parts of the text by Sobel. We skip section 3.3. and emphasize the example 1 on page 406, illustrating Rabin’ s model. (Lecturer: HL)

10.15am – 11 am:

Third session of student presentations organized as described above.

11.15 am – 12 am:

A debate on the role of fairness versus efficiency, and ex-ante versus ex-post evaluations, in law. Students self-select into two groups: one that views efficiency and the other which views fairness as the main concern. Based on real world examples, the two groups prepare coherent arguments in favor of their views.

The arguments are presented and discussed in class.

12.15 am – 1 pm:

The Benabou-Tirole model of beliefs as assets (a model of identity). The article is not required reading but its main ideas will be presented in class. (Lecturer: HL)

Lunch 1pm – 2pm

Afternoon sessions:

2 pm – 2.45 pm:

Third session of student presentations organized as described above.

3 pm – 3.45 pm

A summary of the course’s main points. (HL and GN)

The course aims to provide the student with an understanding of: 

1. basic game theoretic concepts, such as  utility-functions, expected utility maximisation, Nash-equilibrium, prisoner’s dilemma, moral hazard, and adverse selection.      
2. the applicability of these concepts to the analysis of select questions in contract law, in legal procedure and in tort law, and to the student’s own project
3. some basic concepts and theories of law and economics, such as the theory of contractual and delictual compensation,  the Coase theorem, and the theory of litigation
4. the applicability of some of those theories to the student’s own project
5. the use of social welfare functions in the analysis of law, mainly concerning the role of fairness and efficiency
6. modern developments in economic analysis of importance to law, mainly concerning the incorporation of psychology (reciprocity and self-beliefs)

Course Fee

PhD students from JurForsk institutions or Høgskolen i Sørøst-Norge: 850 DKK for refreshments during the course and one joined dinner for faculty and students on the first course day

Other students will be charged a full course fee DKK 3.250

Faculty: Henrik Lando (hl.jur@cbs.dk)/Troels Michael Lilja (tml.jur@cbs.dk)

Administration: Blazenka B. Kvistbo, bbk.research@cbs.dk