Law, Economics And Psychology - Harvard Law School

Bar-Gill, OrenLaw, Economics and PsychologySpring 2017 courseLaw, Economics and PsychologyProfessor Oren Bar-GillSpring 2017ReadingsReading assignments are listed below.Readings that are not available online (through the electronic resources that Harvardsubscribes to) can be found in the Course Materials section of the course website (onCanvas); otherwise, they will be placed on reserve at the library.Optional Reading: The syllabus includes optional readings from STEVEN SHAVELL,FOUNDATIONS OF ECONOMIC ANALYSIS OF LAW (Harvard University Press, 2004).Several copies of the book have been placed on reserve at the law school library.Optional Background Reading: A. MITCHELL POLINSKY, AN INTRODUCTION TO LAW ANDECONOMICS (4th Ed. Aspen, 2011).Attendance and ParticipationClass participation and attendance are required. You may be called on to discuss thereading materials or the issues covered in class. Voluntary participation in classdiscussion is encouraged.Office HoursMy office is located in Griswold Hall, Room 310. Office hours are Monday 2:15-3:45.You are always welcome to e-mail me (bargill@law.harvard.edu) with any questions,concerns and comments you have regarding class, or to schedule an appointment outsideoffice hours. Questions related to the material covered in class should be posted on theDiscussions section of the course website (on Canvas). I will monitor the Discussionsand respond to your questions.ExaminationThe final exam is a three-hour in-class test.AccessibilityHarvard Law School is dedicated to facilitating equal access for students with disabilities and tocultivating a campus culture that is sensitive and responsive to the needs of students. To requestan accommodation for a disability during the course, students are welcome to reach out toAccessibility Services in the Dean of Students Office at accessibility@law.harvard.edu or at 617495-1880. You may also visit the office in WCC 3039. Additional information, including how toregister for accommodations can be found at http://hls.harvard.edu/dept/dos/accessibility/.1

Bar-Gill, OrenLaw, Economics and PsychologySpring 2017 course1. Introduction [Class #1 (1/28) and Class #2 (1/29)]1) Christine Jolls, Cass R. Sunstein and Richard H. Thaler, “A Behavioral Approachto Law and Economics,” 50 Stanford Law Review 1471, 1471-1489 (1998).2. Law Enforcement [Class #3 (2/4) and Class #4 (2/5)]Traditional Law and Economics1) Optional Reading: STEVEN SHAVELL, FOUNDATIONS OF ECONOMIC ANALYSISLAW, pp. 479-489 (Ch. 20, Sections 2.1-2.5) (Harvard University Press, 2004).OFBehavioral Law and Economics2) After Class: Christine Jolls, “On Law Enforcement with Boundedly RationalActors,” in FRANCESCO PARISI AND VERNON L. SMITH (EDS.), THE LAW ANDECONOMICS OF IRRATIONAL BEHAVIOR, ch. 11, pp. 268-279 (Stanford UniversityPress, 2005).3) After Class: Alon Harel and Uzi Segal (1999), “Criminal Law and BehavioralLaw and Economics: Observations on the Neglected Role of Uncertainty inDeterring Crime,” 1 American Law and Economics Review 276 (1999).3. Litigation and Settlement [Class #5 (2/11), Class #6 (2/12), Class #7 (2/18) andClass #8 (2/19)]A. Adjudication1) Smith v. Rapid Transit, Inc., 317 Mass. 469, 58 N.E.2d 754 (1945).2) People v. Collins, 68 Cal.2d 319, 438 P.2d 33 (1968) [No need to read theAppendix].3) Barefoot v. Estelle, 463 U.S. 880 (1983) [Read Justice Blackmun’s dissent].4) McCleskey v. Kemp, 481 U.S. 279 (1987) [Read Justice Brennan’s dissent, PartsII and III].B. Settlement NegotiationsTraditional Law and Economics1) Optional Reading: STEVEN SHAVELL, FOUNDATIONS OF ECONOMIC ANALYSISLAW, pp. 401-407 (Ch. 17, Sections 3.1-3.2) (Harvard University Press, 2004).2OF

Bar-Gill, OrenLaw, Economics and PsychologySpring 2017 courseBehavioral Law and Economics2) After Class: Linda Babcock and George Loewenstein, “Explaining BargainingImpasse: The Role of Self-Serving Biases,” 11 Journal of Economic Perspectives109, 109-117 (1997) [also in CASS SUNSTEIN (ED.), BEHAVIORAL LAW ANDECONOMICS 355, 355-363 (Cambridge University Press, 2000)].3) Oren Bar-Gill, “The Evolution and Persistence of Optimism in Litigation,” 22Journal of Law, Economics & Organization 490 (2006). [Introduction only]4. Property [Class #9 (2/25) and Class #10 (2/26)]Traditional Law and Economics1) Optional Reading: STEVEN SHAVELL, FOUNDATIONS OF ECONOMIC ANALYSIS OFLAW, pp. 77-92, 101-109 (Ch. 5, Sections 1-4, 6) (Harvard University Press,2004).Behavioral Law and Economics2) Daniel Kahneman, Jack L. Knetsch and Richard H. Thaler, “Experimental Testsof the Endowment Effect and the Coase Theorem,” 98 Journal of PoliticalEconomy 1325 (1990) [also in CASS R. SUNSTEIN (ED.), BEHAVIORAL LAW ANDECONOMICS 211 (Cambridge University Press, 2000)]. [Sec. I (Introduction) andSec. II (Repeated Market Experiments)]3) Russell Korobkin, “The Endowment Effect and Legal Analysis,” 97 NorthwesternUniversity Law Review 1227, 1227-1230, 1256-1259, 1262-1266, 1269-1279(2003).4) Oren Bar-Gill and Nicola Persico, “The Taking of Things: Property Rules vs.Liability Rules Reconsidered,” Working Paper (2016).5. Contracts [Class #11 (3/3), Class #12 (3/4), Class #13 (3/10), Class #14 (3/11) andClass #15 (3/24)]Traditional Law and Economics1) Optional Reading: STEVEN SHAVELL, FOUNDATIONS OF ECONOMIC ANALYSIS OFLAW, pp. 291-324, 338-355, 362-367 (Ch. 13; Ch. 15, Sections 1, 2, 4) (HarvardUniversity Press, 2004).Behavioral Law and Economics2) Williams v. Walker-Thomas Furniture Co., 350 F.2d 445 (DC Cir. 1965).3

Bar-Gill, OrenLaw, Economics and PsychologySpring 2017 course3) Russell Korobkin, “Bounded Rationality, Standard Form Contracts, andUnconscionability,” 70 University of Chicago Law Review 1203 (2003).[Introduction Parts I, II, IV]4) Melvin Aron Eisenberg, “The Limits of Cognition and the Limits of Contract,” 47Stanford Law Review 211 (1995). [Introduction and Sec. II.A.]5) OREN BAR-GILL, SEDUCTION BY CONTRACT (Oxford University Press, 2012) [Ch.1 (not including the Appendix), Introduction to Ch. 2, Introduction to Ch. 3, andIntroduction to Ch. 4)6) Oren Bar-Gill, “Price Caps in Multi-Price Markets,” 44 Journal of Legal Studies453 (2015). [Introduction only]7) Oren Bar-Gill, “Bundling and Consumer Misperception,” 73 University ofChicago Law Review 33 (2006). [Introduction only]8) Alaska Packers v. Domenico, 117 F. 99 (9th Cir. 1902).9) Lingenfelder v. Wainwright Brewery Co., 15 S.W. 844 (Mo. 1891).10) Oren Bar-Gill and Omri Ben-Shahar, “Threatening an “Irrational” Breach ofContract,” 11 Supreme Court Economic Review 143 (2004) [also in FRANCHESCOPARISI & VERNON SMITH (EDS.), THE LAW AND ECONOMICS OF IRRATIONALBEHAVIOR, ch. 19 (Stanford University Press, 2005)] [Introduction and Sec. V(Irrationality in Modification Doctrine – Case Discussion)].6. Torts [Class #16 (3/25), Class #17 (3/31), Class #18 (4/1) and Class #19 (4/7)]A. LiabilityTraditional Law and Economics1) Optional Reading: STEVEN SHAVELL, FOUNDATIONS OF ECONOMIC ANALYSIS OFLAW, pp. 177-182 (Ch. 8, Section 1), pp. 212-217 (Ch. 9, Sections 2.1 – 2.3)(Harvard University Press, 2004).Behavioral Law and Economics2) Jeffrey J. Rachlinski, “A Positive Psychological Theory of Judging in Hindsight,”65 University of Chicago Law Review 571 (1998) [also in CASS R. SUNSTEIN(ED.), BEHAVIORAL LAW AND ECONOMICS 95 (Cambridge University Press,2000)] [Introduction, Sec. I, Sec. II and Sec. III].3) Oren Bar-Gill and Kevin Davis, “(Mis)perceptions of Law in ConsumerMarkets,” Working Paper (2016). [Introduction only]B. DamagesPain and Suffering Damages1) After Class: Edward McCaffery, Daniel Kahneman, and Matthew Spitzer,“Framing the Jury: Cognitive Perspectives on Pain and Suffering Awards,” 814

Bar-Gill, OrenLaw, Economics and PsychologySpring 2017 courseVirginia Law Review 1341 (1995) [also in CASS R. SUNSTEIN (ED.), BEHAVIORALLAW AND ECONOMICS 259 (Cambridge University Press, 2000)] [Introduction,Sec. I and Sec. II].Punitive Damages – Traditional Law and Economics2) Optional Reading: STEVEN SHAVELL, FOUNDATIONS OF ECONOMIC ANALYSISLAW, pp. 243-244 (Ch. 10, Sections 9.1-9.3) (Harvard University Press, 2004).OFPunitive Damages – Behavioral Law and Economics3) BMW v. Gore, 517 US 559 (1996) [Read the majority opinion, pp. 562-587,and Justice Breyer's concurrence, pp. 587-598. Take a look also at the Appendixto Justice Ginsburg's dissent.]4) Barker v. Lull Engineering Company, 573 P.2d 443, 455-456 (Headnote 8)(1978).5) Grimshaw v. Ford Motor Company, 119 Cal.App.3d 757, 790 (Headnote 23), 810(Headnotes 49, 50), 812-813 (Headnote 57) (1981).7. Privacy and Big Data [Class #20 (4/8)]1) Alessandro Acquisti, “The Economics of Personal Data and the Economics ofPrivacy,” Working Paper (2010).8. Antidiscrimination and Affirmative Action [Class #21 (4/14)]Traditional Law and Economics2) Optional Reading: RICHARD A. POSNER, ECONOMIC ANALYSIS OF LAW, pp. 350356 (Ch. 11, Section 11.9), pp. 681-690 (Ch. 27) (6th ed., Aspen Law & Business,2003).Behavioral Law and Economics3) Christine Jolls and Cass R. Sunstein, “The Law of Implicit Bias,” 94 CaliforniaLaw Review 969 (2006).9. Redistribution [Class #22 (4/15)]Traditional Law and Economics1) Optional Reading: STEVEN SHAVELL, FOUNDATIONS OF ECONOMIC ANALYSISLAW, pp. 647-660 (Ch. 28) (Harvard University Press, 2004).5OF

Bar-Gill, OrenLaw, Economics and PsychologySpring 2017 courseBehavioral Law and Economics2) Christine Jolls, “Behavioral Economic Analysis of Redistributive Legal Rules,”51 Vanderbilt Law Review 1653 (1998) [also in CASS R. SUNSTEIN (ED.),BEHAVIORAL LAW AND ECONOMICS 288 (Cambridge University Press, 2000)][Sec. I (Introduction) and Sec. II]10. Regulation [Class #23 (4/21) and Class #24 (4/22)]A. Cost Benefit Analysis vs. Well-Being AnalysisTraditional Law and Economics1) Cass R. Sunstein, “The Real World of Cost-Benefit Analysis: Thirty-SixQuestions (and Almost as Many Answers),” 114 Columbia Law Review 167(2014) [Sections I, II, III, VIII and IX].Behavioral Law and Economics2) JOHN BRONSTEEN, CHRISTOPHER BUCCAFUSCO AND JONATHAN S. MASUR,HAPPINESS & THE LAW, pp. 27-44 (University of Chicago Press, 2015).B. Nudge1) Colin Camerer et al., “Regulation for Conservatives: Behavioral Economics andthe Case for “Asymmetric Paternalism,”” 151 University of Pennsylvania LawReview 1211 (2003).2) Michael S. Barr, Sendhil Mullainathan and Eldar Shafir, “The Case forBehaviorally Informed Regulation,” in David Moss and John Cisternino (eds.),NEW PERSPECTIVES ON REGULATION (Cambridge, MA; The Tobin Project, 2009)[Introduction, Sec. II, Sec. III.1 and Sec. III.2].3) Ryan Bubb and Richard H. Pildes, “How Behavioral Economics Trims Its Sailsand Why,” 127 Harvard Law Review 1593 (2014) [Introduction, Sec. I, Sec. IIand Sec. III]4) Oren Bar-Gill and Omri Ben-Sahar, “Optimal Defaults in Consumer Markets,”Journal of Legal Studies (2016) [Sec. 1 (Introduction) and Sec. 2]11. Conclusion Review [Class #24 (4/22)]1) Christine Jolls, Cass R. Sunstein and Richard H. Thaler, “A Behavioral Approachto Law and Economics,” 50 Stanford Law Review 1471, 1471-1489 (1998).2) Richard A. Posner, “Rational Choice, Behavioral Economics, and the Law,” 50Stanford Law Review 1551 (1998).6

Traditional Law and Economics . 1) Optional Reading: STEVEN SHAVELL, FOUNDATIONS OF ECONOMIC ANALYSIS OF LAW, pp. 401-407 (Ch. 17, Sections 3.1-3.2) (Harvard University Press, 2004). Bar-Gill, Oren Law, Economics and Psychology Spring 2017 course