University of Kansas, Spring 2005
Philosophy 674: Philosophy of Law
Ben Eggleston—eggleston@ku.edu
Study questions: chapter 6, “Law and Economics”
The following questions are intended to guide your reading of the assigned texts
by calling attention to key concepts, distinctions, principles, and other parts
of the texts. The questions are listed in the order in which their answers
should become evident to a close reader.
[Click here to print this
frame.]
- pp. 170–183
- What are the three kinds of theses associated with the law and economics
movement?
- Suppose a person wants to buy and eat as many cookies as it would be
economically rational for her to buy and eat. How should she determine how
many cookies to buy and eat?
- What does it mean for an allocation of resources to be Pareto optimal?
- What does it mean for one allocation of resources to be Pareto superior to
another?
- What does it mean for an allocation of resources to conform to Posner’s
wealth-maximization criterion?
- Suppose you have paid me for some potatoes that I am selling, but I decide
to deliver them to someone else who is willing to pay more for them. How might
it promote economic efficiency for the law to say that all I have to do is
give you your money back (as opposed to saying that I am barred from
delivering my potatoes to anyone except you)?
- According to the Hand formula, what inequality must be satisfied in order
for a person to have behaved negligently?
- Suppose you and I keep our boats tied to piers at the same lake. Every
year, I use rope costing $50 to secure my boat, so that it doesn’t break free
in a storm and smash into yours and cause damage to your boat that would cost
you $5,000 to
fix. (Assume that, due to the way the boats are built, any damage my boat does
to yours would cost you $5,000 to fix.) One year, in a big storm with lots of
wind, my boat breaks free and smashes into yours, costing $5,000 worth of
damage to your boat. You sue me, claiming that I was negligent in the way I secured my
boat. I respond by claiming that in any given year, the probability of a storm
bad enough to break a $50 rope is less than 1 percent. Assuming that I am
correct in this assertion, does my conduct satisfy the Hand formula?
- Suppose that I use my boat as a water taxi that people use to quickly get
from one side of the lake to the other. Sometimes, the wake from my boat
causes waves to splash up on the shore of your property, ruining expensive
rare books that
you (let’s say you’re a rare-book dealer!) often keep stacked there.
Fortunately for me, the law of our little maritime municipality says that you, not I, are responsible for the damage my
boat causes to your books. What must be true (about the costs involved in the
way we run our respective businesses) in order for for this aspect of the law to be economically
efficient?
- Suppose that, for whatever reason, the law economically inefficiently
says that I am responsible for the damage my boat causes to your books. What
sort of arrangement does the Coase theorem predict that you and I will reach?
- pp. 183–187
- What argument does Posner give in support of the economic-efficiency
explanation of the common law?
- What rival explanation of the economic efficiency of the common law does
Altman consider?
- pp. 187–196
- In what sense is the wealth-maximization criterion for evaluating the law
supposed to be a “neutral” criterion that everyone can endorse?
- On what grounds does Posner argue that the wealth-maximization criterion
protects individual rights? (You can answer this question just in terms of the
individual right not to be enslaved.)
- It is often claimed that the economic approach to law has a conservative
bias. How can it be argued, to the contrary, that wealth would be maximized if
the government would run a fairly extensive welfare program for the poor?
- What is the main idea of the contrast between conservatives in the law and
economics movement and liberals in that movement?
- Why, according to Altman, is it not in everyone’s equal interest for
society to maximize efficiency?