Abstract
This chapter introduces the history, uses, methods, strengths, and limits of law and economics and game theory as applied to law. Through a game-theoretic analysis of a famous judicial opinion, United States v. Carroll Towing, the chapter describes the efficiency consequences of different potential legal rules and illustrates some of the considerations and challenges inherent in selecting the efficient legal rule. The chapter also highlights some of the trade-offs inherent in the law and economics approach and in employing game theory as a tool for modeling legal problems.
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Cases
Eastman Kodak Co. v. Image Tech. Servs., Inc., 504 U.S. 451 (1992).
McCarty v. Pheasant Run, Inc., 826 F.2d 1554 (7th Cir. 1987).
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Acknowledgements
This work is a revised and updated version of the following: Hanson, Jon D., Kathleen Hanson & Melissa Hart. “Law and Economics” in A Companion to the Philosophy of Law and Legal Theory (D.M. Patterson, Wiley-Blackwell, 2010). We are grateful to D.M. Patterson and Wiley-Blackwell for granting permission to republish portions of that chapter here. We would also like to Amanda Frye and Jelani Karamoko for their valuable assistance in making revisions to this version.
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Hanson, J., Hanson, K., Hart, M. (2014). Game Theory and the Law. In: Chatterjee, K., Samuelson, W. (eds) Game Theory and Business Applications. International Series in Operations Research & Management Science, vol 194. Springer, Boston, MA. https://doi.org/10.1007/978-1-4614-7095-3_9
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