HARVARD UNIVERSITY
Department of Economics
Economics 970: Sophomore Tutorial
Law and Economics
Instructor: Michael Chu (michu@law.harvard.edu)
Meeting Times: Tuesdays and Thursdays, 4-5:30, Eliot E-14
COURSE DESCRIPTION
The application of economic analysis to law has, in recent years, developed into one of the major
schools of thought for understanding, justifying, and reforming legal rules and the legal process.
In this tutorial, students will read and discuss articles addressing areas of the law from an
economic perspective, and consider whether the law is utility maximizing, and if not, whether
alternative rules would be preferred. Though the focus of the tutorial will primarily be on
whether or not rules of the current legal system are welfare-maximizing, the class will also
consider to what extent a legal system should be concerned with welfare maximization.
Additionally, since behavioral economics research has weakened the validity of the neoclassical
assumption that that people are purely rational actors, the class will also consider the
implications for liability and damage rules when the neoclassical assumptions fail.
The course will use examples from topics taught in the first year law school curriculum including
property, torts, contracts, criminal law, and the litigation process. No legal background is
necessary, but students with an interest in law are encouraged to apply.
Math Level: 1
COURSE REQUIREMENTS
1. Class Participation 25%
Class discussions are an essential component of the sophomore tutorial. Students are expected to
contribute meaningfully and consistently to class discussion. Students are also expected to
complete the reading assigned for each week and to come to class prepared with comments and
questions. In addition, each student will sign up to ‘specialize in’ particular topics on the
syllabus. The specialist for the topic will have primary responsibility for leading discussion that
day and will prepare a brief oral overview of the readings and a set of discussion questions for
the class. Additional research on the topic is recommended.
2. Three Response Papers 10%
In order to focus our reading and stimulate discussion, students will write response papers
structured around questions about the specific readings. These papers should be 1-2 pages long.
3. Two Short Essays 15%
Short essays are intended to provide students the opportunity to discuss, in greater detail, one of
the major themes of the unit. These essays need not include additional research and should be 46 pages in length.
4. Empirical Exercise. 10%
The empirical exercise will lead you through a data set that you will use to construct an
econometric model, report your findings, and analyze your results. We will devote a class to
review some basic econometric concepts and the context for the empirical exercise. Expected
length will be 4-6 pages.
5. Prospectus for final paper. 5% of grade (Sat/Unsat)
Before you leave for spring break you will be expected to share your final paper topic with me.
You will then submit a 2-3 page proposal for your paper in mid-April. This proposal should
outline the question you hope to address and explain the tentative framework through which you
will do so. The proposal should demonstrate that you have begun to research where your
question fits in with the existing literature.
6. Final Paper. 35%
For your final paper, you will be free to choose any topic that interests you. The topic must be
related to the subject of law and economics and must go substantially beyond the readings
covered in this course. Expected length of the final paper will be 14-16 pages.
COURSE POLICIES
Readings. Readings cover relevant background materials and economic theory for each topic.
The readings are all available in either the course reading packet or online. Additionally,
throughout the semester, the course packet may be supplemented with more recent materials.
Because class discussion is an essential part of the course, reading assignments must be
completed prior to each tutorial session.
Attendance. Attendance is mandatory at all regular class meetings. Exceptions for personal or
family emergencies will be granted on a case-by-case basis. A note from your Senior Tutor is a
necessary condition for any exception.
Tardiness. Response papers are due at the beginning of class on the assigned day. Unless
otherwise noted, all other assignments are due at 5pm on the date specified in my mailbox in
Harkness Commons. Electronic submissions will also be accepted; however, such submissions
must be received by the 5pm deadline. No assignments will be accepted beyond the announced
deadline. As with attendance, exceptions for personal or family emergencies may be granted on a
case-by-case basis. A note from your Senior Tutor is a necessary condition for any exception.
Office Hours. Office hours will be held after class on Thursdays. I will be available at other
times by appointment.
ASSIGNMENT DUE DATES:
Short Essay 1: February 25
Response Paper 1: March 1
Response Paper 2: March 8
Response Paper 3: March 15
Short Essay 2: March 25
Empirical Exercise: April 8
Final Paper Prospectus: April 15
Final Paper: May 10
UNIT I—INTRODUCTION
THURSDAY FEB 10: INTRODUCTION TO LAW AND ECONOMICS
 Richard Posner. The Law and Economics Movement, 77 The American Economic
Review 1, 1-7 (1987) (Available on JSTOR)
 A. Mitchell Polinsky. An Introduction to Law and Economics, Chapter 1-2
 Monge v. Beebe Rubber Co., 316 A.2d 549
 Howard v. Dorr Woolen Co., 414 A.2d 1273
TUESDAY FEB 15: UTILITY MAXIMIZATION IN LAW
 Joseph William Singer, Property Law: Rules, Policies and Practices, 323-24
 Louis Kaplow and Steven Shavell, Fairness Versus Welfare, pp. 15-79
 Debate: Is Law and Economics Moral?, 24 Valparaiso L. Rev. 147 (1990) (Available on
Hein)
Supplemental readings:
 Dan M. Kahan, The Theory of Value Dilemma: A Critique of the Economic Analysis of
Criminal Law, 1 Ohio State Journal of Criminal Law 643 (2004)
 George P. Fletcher, Fairness and Utility in Tort Theory, 85 Harv. L. Rev. 537, 537-51,
556-60, 564-73 (1972) (Available on Hein)
 Denis J. Brion, Law Making: Utilitarian Reasoning in Judicial Decision-making, 23
Legal Stud. Forum 93 (1999) (Available on Lexis-Nexis)
 Amartya Sen, The Impossibility of a Paretian Liberal, 78 Journal of Political Economy
152, 155-57 (1970) (Available on JSTOR)
THURSDAY FEB 17: THE ECONOMIC ACTOR
 Christine Jolls et. al. A Behaviorial Approach to Law and Economics, 50 Stanford L.
Rev. 1471-89, 1508-16, 1541-47 (1998) (Available on Hein)
 Richard Posner. The Taste for Discrimination: An Economic Analysis (1977)
 Christine Jolls and Cass R. Sunstein (2004), “Debaising Through Law,” Harvard Law
School, Olin Law & Economics Discussion Paper #495, 1-34 (available at
http://www.law.harvard.edu/programs/olin_center/papers/495_Jolls_et%20al.php)
 The Intelligent Bayesian, New Republic, November 18, 1986
 Spirit Murdering the Messenger, 42 U. Miami L. Rev. 127 (1987)
Short Essay 1 Assigned
UNIT II—PROPERTY LAW
TUESDAY FEB 22: ASSIGNING PROPERTY RIGHTS
 Cooter & Ulen, Law and Economics, 85-99
 Daniel Kahneman et al. Experimental Tests of the Endowment Effect and the Coase
Theorem, 98 J. Political Econ. 1325-48 (available on JSTOR)
 John Locke, Second Treatise of Government, Ch. 5
 Pierson v. Post, 3 Cai. R. 175 (N.Y. 1805)
 Elliff v. Texon Drilling Co., 210 S.W. 558 (Tex. 1948) [including accompanying article]
Supplemental readings:
 Joseph William Singer, Property Law: Rules, Policies and Practices, 321-41

Ronald Coase, The problem of social cost, 3 J. L. and Econ. 1-44 (available on JSTOR)
THURSDAY FEB 24: HUMAN PROPERTY: SALE OF HUMAN ORGANS
 Moore v. Regents of the University of California, 51 Cal. 3d 120 (1990)
 Cooter & Ulen, Law and Economics, 161-64
 “Health Officials wary of black market in body parts,” San Francisco Chronicle, August
11, 2002 (Available on Lexis-Nexis)
 “Americans buying; kidneys in Manila,” Chicago Sun-Times, July 22, 2001. (Available
on Lexis-Nexis)
Supplemental readings:
 1984 National Organ Transplation Act. http://www.pitt.edu/~htk/document.htm

http://www.organdonor.gov/faq.html#11
FRIDAY FEB 25: SHORT ESSAY 1 DUE
TUESDAY MAR 1: NUISANCE AND TRESPASS
 Dukeminier & Krier, “Judicial Land Use Controls: The Law of Nuisance”, Property
(2002)
 Mitchell Polinsky, An Introduction to Law and Economics, Chapter 4
 Cooter & Ulen, Law and Economics, 168-70
 Boomer v. Atlantic Cement Company, 26 N.Y.2d 219 (1970)
 Arkansas Release v. Needler, 252 Ark. 194 (1972)
 “Council split over halfway house Eastsiders cry partisanship as colleagues back site
near North Bend for sex offenders”, The Seattle Times, February 26, 2003.
 Martin v. Reynolds Metals Co, 342 P.2d 790 (Ore. 1959) [skim]
 Ploof v. Putnam, 71 A. 188 (Vt. 1908)
 Vincent v. Lake Erie Transportation Co, 124 N.W. 221 (Minn. 1956)
 Crescent Mining Co. v. Silver King Mining Co., 54 P. 244 (Utah 1898)
Response Paper 1 Due
THURSDAY MAR 3: FIFTH AMENDMENT “TAKINGS”
 Cooter & Ulen, Law and Economics, 174-81
 Poletown Neighborhood Council v. Detroit, 304 N.W.2d 455 (Mich. 1981)
 Joseph William Singer, Property Law: Rules, Policies and Practices, 1130-40
 Economic Analysis of "Takings” of Private Property¸ The Bridge
 “Despotism in New London”, The Washington Post, September 19, 2004. (Available at:
http://www.washingtonpost.com/ac2/wp-dyn/A30314-2004Sep17?language=printer)
Supplemental readings:
 Penn Central Transportation Co. v. New York City, 438 U.S. 104 (1978)
 Lucas v. South Carolina Coastal Council, 505 U.S. 1003 (1992)
 Pennell v. City of San Jose, 108 U.S. 849 (1988)
UNIT III—TORTS
TUESDAY MAR 8: NEGLIGENCE ANALYSIS

Economic Analysis of Alternative Standards of Liability in Accident Law, The Bridge at
http://cyber.law.harvard.edu/bridge/
 McCarty v. Pheasant, 826 F.2d 1554 (7th Cir. 1997)
 Snyder v. AABB, 659 A.2d 482 (N.J. 1996)
 Brown v. UBS, 858 P.2d 391 (Nev. 1993)
 Raim v. Ventura, 113 N.W.2d 827 (Wis. 1962)
 The T.J. Hooper, 60 F.2d 737 (2d Cir. 1932)
 Vaughan v. Menlove, Common Pleas (1837)
 Public Service of NH v. Elliott 123 F.2d 2 (2d Cir. 1941)
 Williamson v. Garland, 402 S.W.2d 80 (Kentucky Ct. App. 1966)
 Smith v. Sneller, 24 A.2d 61 (Pa. Sup. Ct. 1942)
 Sarah L. Park. “Parents Sue MIT Over Suicide”, The Crimson Online, January 31, 2002.
 Harry Lewis. “Harvard in a Beer-Ad World”, The Crimson Online, November 4, 2002
Response Paper 2 Due
THURSDAY MAR 10: NEGLIGENCE VS. STRICT LIABILITY
 Cooter & Ulen, Law and Economics, 320-28
 Guido Calabresi & Jon T. Hirschoff, Toward a Test for Strict Liability in Torts, 81 Yale
L.J. 1055, 1055-67 (1972) (Available on Hein)
 James Buchanan, In defense of caveat emptor, 38 U. Chi. L. Rev. 64 (1970) [focus on pp.
64-70] (Available on Hein)
 “How Liability Laws Can Be Bad For Your Health”, Chicago Tribune, September 2,
1991. (Available on Lexis-Nexis)
Supplemental readings:
 Duncan Kennedy, Distributive and Paternalist Motives in Contract and Tort Law, 41
Md. L. Rev. 563, 570-75, 650-53 (1982)
 Ronald McKean. Products Liability: Implications of Some Changing Property Rights, 84
The Quarterly Journal of Economics (1970) (available on JSTOR)
TUESDAY MAR 15: WARNING LIABILITY
 James Buchanan, In defense of caveat emptor, 38 U. Chi. L. Rev. 64 (1970) [focus on pp.
70-72] (Available on Hein)
 Viscusi & Magat, Learning about Risk, Ch. 2 & Ch. 5
 MacDonald v. Ortho Pharmaceutical, 475 N.E. 2d 65 (Mass. 1985)
 Cotton v. Buckeye, 840 F.2d 935 (D.C. Cir. 1988)
 W. Kip Viscusi, Tobacco: Regulation and Taxation Through Litigation, in Regulation
Through Litigation 35-42 (2002) (Available through Hollis)
 Michael Woods, “Europe’s Cigarette Labeling Emphatic,” Pittsburgh Post-Gazette
November 1, 2003 (Available on Lexis-Nexis)
 “Big Food faces grilling over America's obesity 'epidemic'”, Financial Times (London)
November 27, 2002. (Available on Lexis-Nexis)
Response Paper 3 Due
THURSDAY MAR 17: ALTERNATIVES TO TORT LIABILITY

Symposium: Alternative Compensation Schemes and Tort Theory:
Deterrence in Tort and No-Fault: The New Zealand Experience, 73 Calif. L. Rev. 976
(1985) (Available on Hein)

Medical Injuries and Malpractice: Is it Time for “No
Fault”? 91 Health L.J. (1993)
 “Tort on stilts”, The Economist, March 24, 2001. (Available on Lexis-Nexis)
Short Essay 2 Assigned
TUESDAY MAR 22: PUNITIVE DAMAGES
 Polinsky & Shavell. Punitive Damages: An Economic Analysis, 111 Harv. L. Rev. 869
(1998) (Available on Hein)
 Richard Epstein. “Punitive Damages: on the move”, Cases and Materials on Torts (2000)
 “How Jury Decided How Much the Coffee Spill was Worth”, St. Louis Post-Dispatch,
September 4, 1994. (Available on Lexis-Nexis)
Supplemental readings:
 Cass R. Sunstein et al., Assessing Punitive Damages (With Notes on Cognition and
Valuation in Law), 107 Yale L.J. 2071-2152 (1998) (Available on Hein)
UNIT IV—CIVIL LITIGATION
THURSDAY MAR 24: EMPIRICAL EXERCISE
 Empirical Exercise Assignment
FRIDAY MAR 25: SHORT ESSAY 2 DUE AT 3:00 PM, OR ELECTRONICALLY AT 5:00 PM
TUESDAY APR 5: INCENTIVE AND OPPORTUNITY TO BRING SUIT
 Steven Shavell. John M. Olin Program in Law and Economic Conference on “Tort
Reform”: The Fundamental Divergence Between the Private and Social Motive to Use
the Legal System, 26 Journal of Legal Studies 575 (1997). (available on JSTOR)
 “Bridging the legal aid access gap,” The San Diego Union-Tribune, December 10, 2002
(Available on Lexis-Nexis)
THURSDAY APR 7: SETTLEMENT INCENTIVES & DYNAMICS
 Steven Shavell. Basic Theory of Litigation, Economic Analysis of Law, 2001.
 Christine Jolls et al. A Behaviorial Approach to Law and Economics, 50 Stanford L. Rev.
1489-97, 1501-04 (1998) (Available on Hein)
 John J. Donohue III , Opting for the British Rule, or if Posner and Shavell Can’t
Remember the Coase Theorem, Who Will?, 104 Harvard L. Rev. 1093 (1991) (Available
on Hein)
 Federal Rules of Civil Procedure Rule 68: Offer of Judgment
Supplemental Readings
 Thomas Rowe. The Legal Theory of Attorney Fee Shifting: A Critical Overview. Duke
Law Journal (1982) (Available on Hein)
FRIDAY APR 8: EMPIRICAL EXERCISE DUE
UNIT V—CONTRACT LAW
TUESDAY APR 12: INTRODUCTION TO CONTRACTS AND LIMITS ON ENFORCEMENT



The Purposes of Contract Law, Contract Law and Theory (2002)
Cooter & Ulen, Law and Economics, 195-201
Richard Epstein, Surrogacy: The Case for Full Contractual Enforcement, 81 Va. L. Rev.
2305, 2305-35 (1995) (Available on Hein)
 In re Baby M., 537 A.2d 1227, 1246-51 (N.J. 1988)
 Borelli v. Brusseau, 12 Cal. App. 4th 647 (1993)
Supplemental readings:
 Kaplow & Shavell, “Why Contracts are Made”, Analytical Methods for Lawyers, 2001
(pp 2-5)
 Kenneth Arrow, Invaluable Goods, 35 Journal of Economic Literature 757, 757-61, 764
(available on JSTOR)
THURSDAY APR 14: UNCONSCIONABILITY AND DURESS
 Russell Korobkin, A “Traditional” and “Behavioral” Law-and-Economics Analysis of
Williams vs. Walker-Thomas Furniture Company, UCLA School of Law Research Paper
Series No. 03-24 (available at http://ssrn.com/abstract=471961)
 Cooter & Ulen, Law and Economics, 269-73
 Totem Marine Tug & Barge, Inc. v. Alyeska Pipeline Service Co., 584 P.2d 15 (Alaska
1978)
Supplemental Readings:
 Williams v. Walker-Thomas Furniture, 350 F.2d 445 (1965)
FRIDAY APR 15: FINAL PAPER PROSPECTUS DUE
TUESDAY APR 19: DUTIES TO DISCLOSE
 Anthony Kronman, Mistake, Disclosure, Information, and the Law of Contracts, 7 J.
Legal Stud. 1, 1-18, 24-26, 32-34 (1978) [Available on JSTOR]
 Hill v. Jones, 725 P.2d 1115 (1986)
THURSDAY APR 21: CONTRACT DAMAGES
 Restatement, Second, Contracts §§ 344
 Steven Shavell and Louis Kaplow, Fairness Versus Welfare, pp. 172-82
 Cooter & Ulen, Law and Economics, 258-60
 Charles Knapp et al. Problems in Contract Law: Cases and Materials 913-18
 Erlich v. Menezes, 981 P.2d 978 (Cal. 1999)
Supplemental Readings:
 Steven Shavell and Louis Kaplow, Fairness Versus Welfare, pp. 157-69
TUESDAY APR 26: PRESENTATION AND DISCUSSION OF PAPER TOPICS
THURSDAY APR 28: PRESENTATION AND DISCUSSION OF PAPER TOPICS
UNIT VI—CRIMINAL LAW
TUESDAY MAY 3: GENERAL THEORY AND PROBABILISTIC PUNISHMENT
 Cooter & Ulen, Law and Economics, 470-75

Tracey Meares et al., Updating the Study of Punishment, 56 Stanford Law Review, 1171,
1171-94 (available on Hein)
 Christine Jolls (2004), “On Law Enforcement with Boundedly Rational Actors,” Harvard
Law School, Olin Law & Economics Discussion Paper #495 (available at
http://www.law.harvard.edu/programs/olin_center/papers/495_Jolls.php)
 Dan M. Kahan, The Theory of Value Dilemma: A Critique of the Economic Analysis of
Criminal Law, 1 Ohio State Journal of Criminal Law 643 (2004) (available online)
Supplemental Readings:
 Polinsky, A. Mitchell & Steven Shavell, Law: Economics of its Public Enforcement,
INTERNATIONAL ENCYCLOPEDIA OF THE SOCIAL AND BEHAVIORAL SCIENCES, Volume 12,
Neil J. Smelser and Paul B. Baltes (editors), Elsevier, 2001, pages 8510-8513 (available
on http://www.law.harvard.edu/faculty/shavell/pubs.php)
TUESDAY MAY 10: COURSE EVALUATIONS AND SUBMISSION OF FINAL PAPERS