Copyright (c) 2009 All rights reserved. http://works.bepress.com/robert_cooter Recent documents in Robert Cooter en-us Thu, 19 Nov 2009 11:12:48 PST 3600 http://works.bepress.com/robert_cooter/155 http://works.bepress.com/robert_cooter/155 Mon, 17 Aug 2009 14:31:31 PDT 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 the number of people who violate the norm, contrary to the predictions of some psychologists. When a person suffers from both biases, they can augment or undermine each other. In either case, we show that supplying accurate information will cause more people to conform to the norm. In general, we show that applying the equilibrium concept to psychological studies improves public policy recommendations by increasing precision in predicting aggregate behavior over time. Robert D. Cooter Social Norms http://works.bepress.com/robert_cooter/154 http://works.bepress.com/robert_cooter/154 Mon, 20 Jul 2009 16:03:39 PDT According to the economic theory of bargaining, each party to a voluntary agreement must receive at least the amount that he can get on his own ("threat value"), plus a share of the surplus from the bargain. Courts frequently monitor bargains between citizens and the state. To protect citizens, the courts should focus on the fairness and efficiency of the threat points of the citizens. Unfortunately, courts often focus on the terms of the agreement, not the threat points. The wrong focus leads courts to impose rules that block bargains that would benefit both parties. I analyze an example where the U.S. Supreme Court precluded the possibility of a beneficial bargain between a private property owner and a land-use planning authority. The private property owner wanted a permit to develop land. The state required the private owner to offset the harm by giving something to the public in exchange for the development permit. By focusing on the outcome and not the threat points, the Supreme Court misconceived the problem. Specifically, the Supreme Court misconceived the requirement of a "causal nexus" between the harm that private development will cause to the public and the bargain with the state to offset this harm. Robert D. Cooter law and economic development Property-Personal and Real http://works.bepress.com/robert_cooter/153 http://works.bepress.com/robert_cooter/153 Thu, 16 Jul 2009 10:58:51 PDT The University of California should should respond to the financial crisis of 2009 by reducing employment, not salaries. Employment should be reduced by eliminating inferior programs and activities remote from the core mission of teaching and research. Robert D. Cooter http://works.bepress.com/robert_cooter/152 http://works.bepress.com/robert_cooter/152 Thu, 20 Nov 2008 13:58:30 PST Current legislation allocating losses in the payment system embodies several different approaches. The payment system needs general rules to guide legislation and an analytic framework to develop those rules. Professors Cooter and Rubin use economic analysis to identify three general principles of economic efficiency: loss spreading, loss reduction, and loss imposition. Applying these principles, they develop general rules for allocating payment losses between consumers and financial institutions. The authors apply these rules to fraud, forgery, and error losses that can occur when a consumer uses a payment instrument. They conclude that when an invalid instrument is paid, the consumer should be strictly liable for the loss up to a relatively low, fixed limit, with the financial institution liable for the remainder("capped liability"); and when a valid instrument is not paid, the financial institution should be liable for a proportion of the face value of the loss, up to a fixed limit,with the consumer liable for the residual losses ('face value liability"). Robert D. Cooter http://works.bepress.com/robert_cooter/151 http://works.bepress.com/robert_cooter/151 Wed, 19 Nov 2008 13:44:25 PST In the modern world, nations are relatively poor because their economies fail to grow. Compared to sustained growth, other sources of wealth are insignificant. Sustained growth comes from innovations like a better computer program in Silicon Valley, an improved assembly line in Sichuan, or a new export market for leather in Swaziland. Whether in technology, organization, or markets, a new idea requires money for its implementation. Uniting ideas and capital is a problem of trust. The innovator must trust the investor not to disseminate the idea, and the investor must trust the innovator not to steal the money. We call this problem "the double trust dilemma of development." Countries that solve it grow, and countries that fail to solve it stagnate. Solving it requires effective law, especially the law of property, contracts, and business law (corporations, securities, and bankruptcy). We propose a legal theory of growth that focuses on solving the double trust dilemma by effective private and business law. Conversely, we propose a theory of the poverty of nations caused by ineffective private and business law. Robert D. Cooter law and economic development http://works.bepress.com/robert_cooter/150 http://works.bepress.com/robert_cooter/150 Tue, 05 Feb 2008 12:49:45 PST The United States has recognized the power of American Indian tribes to make laws at least since 1934. Most tribes, however, did not write down many of their laws until the 1960s. Written laws have subsequently accumulated in well-organized codes, but scholars have not previously researched them. Using written materials and interviews with tribal officials, we describe the scope, motivation, and interpretation of tribal codes. With respect to scope, we found nine main types of codes that cover almost all fields of law over which tribes have jurisdiction. Few tribes have all nine types of codes. Tribes have internal and external motivations for codifying. Internal motivations include preserving culture, maintaining social order, and encouraging economic development. Financial incentives and demands for transparency supply outside motivation. Tribal officials interpret codes pragmatically, which resembles interpretation of codes in continental Europe. Finally, we note that law and justice sometimes require state or federal courts to use a tribal code to decide a case, but they seldom do so, which undermines tribal power and identity. Robert D. Cooter http://works.bepress.com/robert_cooter/149 http://works.bepress.com/robert_cooter/149 Fri, 30 Nov 2007 11:47:17 PST Robert D. Cooter http://works.bepress.com/robert_cooter/148 http://works.bepress.com/robert_cooter/148 Wed, 14 Nov 2007 11:55:11 PST According to the economic theory of bargaining, each party to a voluntary agreement must receive at least the amount that he can get on his own ("threat value"), plus a share of the surplus from the bargain. Courts frequently monitor bargains between citizens and the state. To protect citizens, the courts should focus on the fairness and efficiency of the threat points of the citizens. Unfortunately, courts often focus on the terms of the agreement, not the threat points. The wrong focus leads courts to impose rules that block bargains that would benefit both parties. I analyze an example where the U.S. Supreme Court precluded the possibility of a beneficial bargain between a private property owner and a land-use planning authority. The private property owner wanted a permit to develop land. The state required the private owner to offset the harm by giving something to the public in exchange for the development permit. By focusing on the outcome and not the threat points, the Supreme Court misconceived the problem. Specifically, the Supreme Court misconceived the requirement of a "causal nexus" between the harm that private development will cause to the public and the bargain with the state to offset this harm. Robert D. Cooter http://works.bepress.com/robert_cooter/147 http://works.bepress.com/robert_cooter/147 Mon, 01 Oct 2007 22:44:12 PDT Robert D. Cooter http://works.bepress.com/robert_cooter/146 http://works.bepress.com/robert_cooter/146 Sat, 29 Sep 2007 02:40:21 PDT Robert D. Cooter