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The Intrinsic Value Of Obeying A Law: Economic Analysis Of The Internal Viewpoint, Robert D. Cooter

Robert Cooter

Economic theory distinguishes sharply between what a person wants and what he can have. “Preferences” describe what a person wants, and “constraints” describe the limits of what he can have. The collision of preferences and constraints yields the choices that economists study. The meaning of both terms is broad and flexible. Preferences and constraints help to distinguish between the internal and external viewpoints that H. L. A. Hart made famous. The internal viewpoint concerns preferences to perform legal obligations. A person who prefers to obey a law is willing to give up something to perform his legal obligation. The preference …

Sharing And Anti-Sharing In Teams, Robert D. Cooter, Roland Kirstein

Robert Cooter

Compared to budget-balanced Sharing contracts, Anti-Sharing may improve the efficiency of teams. The Anti-Sharer collects a fixed payment from all team members; he receives the actual output and pays out its value to them. If a team members becomes Anti-Sharer, he will be unproductive in equilibrium. Hence, internal Anti-Sharing fails to yield the first-best outcome. Anti-Sharing is more likely to yield a higher team profit than Sharing, the larger the team, the curvature of the production function, or the marginal effort cost. Sharing is more likely to be better, the greater the marginal product, the cross-partials of the production function, …

Anti-Sharing As A Theory Of Partnerships And Firms, Robert D. Cooter, Roland Kirstein

Robert Cooter

Anti-Sharing may improve the efficiency of teams. The Anti-Sharer collects a fixed payment from all team members; he receives the actual output and pays out its value to them. However, if a team members assumes the role of an "internal" Anti-Sharer, he will be unproductive in equilibrium. Hence, internal Anti-Sharing fails to yield the first-best outcome. External Anti-Sharing may induce the team members to choose efficient effort. The paper presents possible applications of Anti-Sharing: while internal Anti-Sharing may provide an explanation for the existence of senior (or managing) partners, external Anti-Sharing leads to a new theory of the incorporated firm.

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

Robert Cooter

Our perceptions of what other people do often affect what we do. In these situations, perceptual biases can affect what everyone does. By combing the psychology of bias and the economics of equilibrium, we construct a model to predict how individual biases affect aggregate behavior. Psychologists have found at least two systematic biases in the perception of social and legal norms. Empirical studies often find a general tendency to over-estimate how much other people violate social norms – a bias toward moral pessimism. We show that persistence of this bias causes more people to violate the norm than if the …

An Escape From Poverty: Developing Productive Organization, Robert D. Cooter

Robert Cooter

Keynote address on "Innovation, Information, and the Poverty of Nations." My premise is that in the modern world, defective legal institutions cause national poverty and that all nations now have the opportunity to escape poverty by developing productive organizations.

Innovation, Information, And The Poverty Of Nations, Robert D. Cooter

Robert Cooter

Adapt Or Optimize? The Psychology And Economics Of Rules Of Evidence, Robert D. Cooter

Robert Cooter

In civil disputes, the plaintiff must prove his case by the preponderance of the evidence. To reach this standard, the plaintiff accumulates evidence by combining facts. In this chapter, two models of this process are compared. First, decision makers can adapt their behavior for improved results, as assumed in some psychological models. Adaptive models predict that court practice will allow the plaintiff to combine facts according to relatively simple rules. Second, decision makers can optimize their behavior for best results, as assumed in most economic models. Optimization models predict that court practice will require the plaintiff to combine facts in …

The Cultural Justification Of Unearned Income: An Economic Model Of Merit Goods Based On Aristolelian Ideas Of Akrasia And Distributive Justice, Robert D. Cooter, James R. Gordley

Robert Cooter

No abstract provided.

Individuals And Relatives, Robert Cooter

Robert Cooter

No abstract provided.

Liability Externalities And Mandatory Choices: Should Doctors Pay Less?, Robert D. Cooter, Ariel Porat

Robert Cooter

According to legal principles, a driver who negligently breaks a pedestrian's leg should pay the same damages as a doctor who negligently breaks a patient's leg. According to economic principles, however, the driver should pay more than the doctor. Non-negligent drivers impose risk on others without being liable for it. When liability externalities are mainly negative as with driving, liability should increase beyond full compensation to discourage the activity. Unlike pedestrians, patients contract with doctors for treatment and willingly submit to the risk of harm. Imperfections in medical markets cause some kinds of doctors to convey more positive than negative …

The Optimal Number Of Governments For Economic Development, Robert D. Cooter

Robert Cooter

No abstract provided.