Economic theory has invaded legal scholarship and law schools, in
the form of "Law and economics." But the psychology of judgments
and decisions has invaded economic theory, showing that people do
not follow the classic model of economic rationality. Many legal
scholars, such as Cass Sunstein, claim to have started a new
field called "Behavioral law and economics," which explores the
implications of psychology for legal theory. This seminar will
review basic readings in law and economics and then the recent
literature on the relevance of psychology.
Areas of interest include:
- Torts: penalties and compensation
- Criminal penalties, responsibility, victimless crimes and moralistic values
- Tax and redistribution
- Regulation of risk (natural disasters, climate change, equity)
- Elections and voting
This course counts as a capstone seminar in Philosophy, Politics
and Economics (PPE). It is also open to graduate students.
Prerequisites: Micro-economics, and either Psych 153 (judgments and
decisions) or 165 (behavioral economics), or permission.
Foundations of the economic analysis of law
at the Penn Book
Center (not the Penn Bookstore).
Read Shavell, Chapter 1, as background.
Economic Analysis of Property Law, chs. 2, 5, 7 (sections 1-2).
Antonio Vasquez chs. 2, 5
Janice Jung (ch 7, sections 1,2)
1/24 and 1/26
Eminent domain and the psychology of property rights
, Nadler and Diamond
No fair, copycat!
Shavell, Economic Analysis of Accident Law,
ch. 10, sections 8,9; ch. 11, sections 1-6.
Baron, J. &
Intuitions about penalties and compensation in the context of
tort law. Journal of Risk and Uncertainty, 7, 17-33.
Sunstein, C. R.
, Kahneman, D., & Schkade, D. (1998).
Assessing punitive damages.
Yale Law Journal, 107
(Iss. 7), pg. 2071 ff.
Schkade, D., Sunstein, C. R., & Kahneman, D. (2004)
Are juries less erratic than individuals?
Deliberation, polarization, and punitive damages.
Shavell, Contract Law, ch. 13-16.
Seonghoon Jeong (chs. 13-14)
Antonio Vasquez (chs. 15-16)
Moral judgment and moral heuristics in breach of contract
Repugnance as a constraint on markets
Krawiec on baby markets
(shorter but similar,
suitable for class reading and comments)
Economic Analysis of Public Law Enforcement and Criminal Law,
chs. 20, 21 (sections 1-3), 23, 24.
Nell Sorensen (chs. 20, 21)
Colin Hu (chs. 23, 24)
2/16, 2/21 and 2/23
Paul H. Robinson and John Darley (2004).
Does criminal law deter?"
Robinson et al.
The disutility of injustice
Raymond Fisman and Edward Miguel. (2007). Corruption, norms, and legal
enforcement: Evidence from diplomatic parking tickets. Journal
of Political Economy, 115
Baron, J., & Ritov, I. (2009). The role of probability
of detection in judgments of punishment. Journal of Legal Analysis, 2,
Greene, J. D. , Cohen J. D. (2004)
For the law, neuroscience changes nothing and everything.
Philosophical Transactions of the
Royal Society of London B, (Special Issue on Law and the Brain),
Sunstein, C. R. (2005)
Is capital punishment morally required?
Donahue, J. J. III, & Wolfers, J. (2006).
Uses and abuses of empirical evidence in the death penalty debate
General Structure of Law, ch. 25
Sunstein and Thaler,
Thaler, Sunstein, Balz,
Camerer et al.,
Paternalism and psychology
Diamond, Vengeance is ours
A critique of it
Morality and law:
Welfare Economics, Morality, and the Law, ch. 27
Welfare Economics, Morality, and the Law, ch. 27
Nell Sorensen (and JB)
(Behavioral and Brain Sciences, 2005, copyright Cambridge University Press).
Bilz and Nadler
Law, psychology, and morality
Where do non-utilitarian moral rules come from?
Tax and income distribution:
Shavell, chs. 28-29.
Janice Jung (ch. 28)
McCaffery, E. J., & Baron J. (2005).
political psychology of redistribution. UCLA Law Review, 52
McCaffery & Baron,
Isolation effects and the neglect of indirect effects of fiscal policies
Baron and McCaffery on "starve the beast"
McCaffery on consumption tax:
Three views (short)
Progressivity (longer but very good and not as long as it looks)
Sunstein "Cognition and cost-benefit analysis"
Posner and Sunstein,
"Climate change justice"
Baron, "Thinking about global warming"
Kuran and Sunstein,
"Controlling availability cascades." (short version)
Kunreuther and Pauly, "Rules rather than discretion: Lessons from
4/20 and 4/25
Discussion of papers
I will expect one written comment per week from each student on the
reading, submitted before we discuss the reading, unless you are
presenting that week. This should be posted to the mailing list by
sending mail to
I will ask one or two students to present the material for
each class, with whatever comments they care to make. This page
provides useful advice about presentations. In particular, if
you use visual aids, do not simply make an outline and then read
Each student will write a course paper, two drafts. The last
few meetings of the course will be devoted to student
presentations about their papers.
Grading will be arbitrary and capricious. :)