Digital Commons Network^™

Solomon’S Knot: How Law Can End The Poverty Of Nations, Robert D. Cooter, Hans Bernd Schaefer

Robert Cooter

Solomon's Knot: How Law Can End The Poverty Of Nations, Robert D. Cooter, Hans-Bernd Schaefer

Robert Cooter

Sustained growth depends on innovation, whether it’s cutting-edge software from Silicon Valley, an improved assembly line in Sichuan, or a new export market for Swaziland’s leather. Developing a new idea requires money, which poses a problem of trust. The innovator must trust the investor with his idea and the investor must trust the innovator with her money. Robert Cooter and Hans-Bernd Schäfer call this problem the “double trust dilemma of development.” How nations confront it determines whether their economies grow or stagnate. Nowhere is this problem more acute than in poorer nations. Nations are relatively poor in the modern world …

Clearings And Thickets, Robert D. Cooter, Aaron Edlin

Robert Cooter

Abstract: Intellectual property rights create temporary monopoly power for innovators. Monopoly pricing transfers wealth to the innovator from the innovations buyers -- consumers, producers, and other innovators. For innovations mostly used in consumption and production, the transfer from consumers and producers to innovators increases the profitability of innovating and causes more of it. The welfare gains from faster growth quickly overtake the temporary losses from monopoly’s dead weight loss. Thus intellectual property rights should be strong for innovations mostly used by consumers and producers. In contrast, for innovations mostly used by other innovators, the transfer of wealth from one innovator …

Doing What You Say, Robert D. Cooter

Robert Cooter

Making wealth requires people to do what they say. In relationships and repeat transactions, reciprocity makes people do what they say, even without contract law. Relationships and repeat transactions, however, preclude competition. Competition involving transactions with strangers invigorates an economy and enables it to flourish. Making strangers do what they say requires them to commit legally. According to the contract principle for economic cooperation, the law should enable people to commit to doing what they say. When this principle is implemented, strangers can trust each other enough to work together even when money is at stake. Implementing this principle requires …

The Misperception Of Norms: The Psychology Of Bias And The Economics Of Equilibrium, Robert D. Cooter, Mical Feldman, Yuval Feldman

Robert Cooter

This study combines the psychology of bias and the economics of equilibrium. We focus on two of the most discussed perceptual biases found by psychologists who studied the role social norms in ethical decision making. First, psychologists found a general tendency of people to over-estimate how many other people engage in unethical behavior. We show that this bias causes more people to violate the norm than if the bias were corrected. Second, psychologists found a general tendency of a person to over-estimate how many other people act the same as he does. We show that this bias does not change …

Treating Yourself Instrumentally Internalization, Rationality, And The Law, Robert D. Cooter

Robert Cooter

No abstract provided.

Truth-Bonding And Other Truth-Revealing Mechanisms For Courts, Robert D. Cooter, Winand Emons

Robert Cooter

Three Effects Of Social Norms On Law: Expression, Deterrence, And Internalization, Robert D. Cooter

Robert Cooter

State organizations suffer from agency problems that preclude effective motivation of people by formal means alone. Social norms contribute to the effectiveness of state law. Aligning law with morality creates power synergies. I analysis three of them: expression (coordination by law and morality), justification (intrinsic motivation to do what is right) , and sanctions (material costs of wrongdoing).

Mongolia: Avoiding Tragedy In The World's Largest Commons, Robert D. Cooter

Robert Cooter

In Mongolia 300,000 nomadic people herd 25 million animals over an unfenced area twice the size of France. Current economic theories assert that efficiency requires privatizing land until the savings from reduced congestion equal the costs of exclusion. However, the fundamental tradeoff in Mongolia is different. In Mongolia, privatization solves the problem of congestion at the cost of aggravating the problem of spreading risk. Assigning exclusive use-rights over particular pastures to families solves the problem of congestion among herds and increases the transaction costs of moving the herds across climatic zones in response to inclement weather. Thus efficiency requires privatizing …

Economic Theories Of Legal Liability, Robert D. Cooter

Robert Cooter

No abstract provided.

What Is The Public Interest, Robert D. Cooter

Robert Cooter

The proper foundation of welfare economics is a characterization of the fundamental principles embodied in our moral and legal framework, which constitutes a conception of the public interest. We may use a conception of the public interest as a predictive or expiratory device. We may also use a conception of the public interest as a guide to making policy. Welfare economics should formulate and analyze different conceptions of the public interest. There will always be tension over which one is right, but that does not initiate an academic inquiry.