Law-Economics

The primary objective of this three credit course is to familiarize students with various analytic methods and tools and their applications to various legal fields and issues. Topics include decision analysis, risk and uncertainty, preference aggregation and voting problems, selected issues in finance (e.g. time value of money and diversification of risk), elementary game theory, financial statements, basic microeconomics and fundamental concepts in statistical analysis.

Economics plays an important role in all areas of the law. This course introduces students to the economic concepts that they will need to know to be effective litigators and transactional lawyers. Among other things, we will address the following questions. How do markets work? What happens when one party to a transaction has an informational or bargaining advantage? How can we tell whether a party is acting rationally or irrationally? How can lawyers use economics to advice clients, draft contracts and make persuasive legal arguments?

Managers, shareholders, creditors, and regulators make decisions strategically: they try to predict how others may act, and they adjust their behavior in light of those predictions. Therefore, both transactional lawyers and business litigators can benefit from learning about “game theory,” the discipline that studies this sort of strategic behavior. In this seminar, we will learn about bargaining and litigation strategy, the importance of reputation when parties transact with each other repeatedly, and the extent to which informational asymmetries can distort market transactions.

This interdisciplinary seminar critically examines the “rational actor” model of legal decision making (proposed by classical economic theorists) in light of the work of social and cognitive psychology.  This course will examine cutting-edge empirical and experimental research and will challenge the descriptive assumptions that underlie legal doctrine in a variety of areas, including criminal law, contracts, torts, corporate law, administrative law, and the rules of evidence and procedure.