Cover

Half-title

Title

Copyright

Dedication

Contents

Preface

Introduction: Innovation in Legal Thinking

A. Proposals, Consequences, and Ideals

B. Toward Scientific Analysis of Law

C. Bibliographical Note

Part 1: Principles

1. From Formal Logic to Normative Reasoning

A. Formal Deontic Logic

B. Formal Logic’s Failure in Normative Reasoning

C. The Informal Normative Syllogism

Proposals, Consequences, and Ideals in Normative Reasoning

D. Concluding Exercises

E. Bibliographical Note

2. Social Welfare versus Moral Philosophy

A. Ideals behind Law and Economics: Welfarism and Pragmatism

B. Juxtaposition with Other External Derivations of Ideals

i. Deriving Ideals from Existing Rules (Including Formalism)

ii. Rawls’ Contractarianism

iii. The Potential Equivalence of Derived Ideals and Preferences

C. Distinguishing Features of Economic Analysis

i. Avoidance of Moral Relativity

ii. Preference for Applications over Refinement of Principles

iii. Ubiquitous Importance of Incentives

iv. Treatment of Preferences as Objective

v. Lack Bias for Rule Proliferation

vi. Orientation Toward the Future

D. Concluding Exercises

E. Bibliographical Note

3. From Political Philosophy to Game Theory

A. Political Theory

i. Inefficiencies of Majority Rule

ii. Legal Process: Explaining the Administrative State

iii. Civic Republicanism

iv. Perfectionism

B. Voting System Design

An example of the Borda count: Suppose the electorate consists of

C. Game Theory

i. Cooperation Games: Prisoner’s Dilemma

ii. Coordination Games: Driving Side

iii. Game Theory in Legal Scholarship

D. Social Norms

E. Bounded Rationality

F. Concluding Exercises

G. Bibliographical Note

4. The Importance of Distribution of Wealth

A. Redistribute!

B. Do Not Redistribute!

C. Delegating Redistribution to Tax Policy

D. Concluding Exercises

E. Bibliographical Note

5. Coase and Law’s Irrelevance

A. Coasean Irrelevance

B. Normative Use

i. Revealing Imperfections

ii. An Example

C. Transaction Costs: The Usual Suspect

i. Vantage Point Makes Transaction Costs

ii. Innovations Transform Transaction Costs

iii. Litigation Costs: Transaction Cost or Not?

iv. Example: Increasing Social Gain from Private Litigation

v. Normative Implications for Litigation of the Analysis of Transaction Costs

D. Concluding Exercises

E. Bibliographical Note

6. More Failures of Coasean Irrelevance

A. Negotiation Holdouts

B. Systematic Errors

C. Risk Aversion

i. Imposing a Transaction Cost

ii. Substantive Solutions of Risk Aversion

D. Distribution

E. Concluding Exercises

F. Bibliographical Note

Part 2: Methods

7. Mathematical Modeling

A. Symbols, Functions, and Idioms

B. Simplification and the Model as a Premise

C. Modelling Applications

i. Modeling Negligence Law: Optimization

ii. Modeling the End of Affirmative Action: Differential Equations

D. Concluding Exercises

E. Bibliographical Note

8. Confronting Uncertainty: Basic Probability Theory

A. Describing Randomness: Probability and Expectation

B. Mathematical Models of Expectation

C. Uncertain Uncertainty: Conditional Probability

D. Concluding Exercises

E. Bibliographical Notes

9. Advanced Probability: Distributions as the Shape of Randomness

A. The Shape of Randomness: Distribution Functions

i. Visual Comparison of Discrete and Continuous Distributions

ii. CDF and PDF: Features and Relations

iii. Truncated and Censored Distributions

B. The Normal Distribution

C. Concluding Exercise: Imperfect Enforcement

D. Bibliographical Note

10. How to Price Uncertainty: Finance

A. Valuation in Perfect Markets

i. Known Rates: Discounting

ii. Risky Assets

B. Normative Implications of the CAPM

i. Financial Information

ii. Forecasts

C. Financial Market Microstructure: The Game-Theoretical Foundation of the CAPM

D. Normative Application of Microstructure: Insider Trading

E. Concluding Exercises

F. Bibliographical Note

11. Finance and Probability: Options and Derivatives

A. Option Pricing

B. Normative Implications of Option Pricing

i. Recipients of Fiduciary Obligation

ii. Automated Reorganizations via Options

iii. The Options Understanding of the New Value Exception

C. Concluding Exercises

D. Bibliographical Note

12. Using Spreadsheets

A. The Basics

i. Obtaining Built-in Help about Functions

ii. Using the Function Wizard

iii. Categories of Built-in Functions

iv. Relative and Absolute References in Copying

B. Graphics

i. Chart Types

ii. Completing the Chart Wizard

iii. Manipulating Charts

C. Solving Equations

i. The Solver

ii. Goal Seek

D. Macros and User-Defined Functions

i. Recording a Macro

ii. Editing a Macro

iii. Assigning a Macro to a Graphic

iv. Entering a Function

E. Downloading and Combining Data

i. Data Files Separating Columns with Commas or Tabs

ii. Specifying the Type of Data

iii. Fixed-Width Data

iv. Combining Data

F. Concluding Exercises

G. Bibliographical Note

13. Statistics

A. The Use of Statistics in Legal Thinking

B. Fundamentals: Descriptive Statistics and Distributions

C. Empirical Research

i. Basics: Comparing Data That Take Values and Data That Fall into Categories

ii. Determining Influences: Multiple Outcomes

iii. Determining Influences: Yes/No Outcomes

iv. Observations That Are Filtered by a Threshold

D. Concluding Exercises

E. Bibliographical Note

14. Conclusion: Importing Methodological Innovations

A. Cellular Automata

B. Fractals

C. Evolutionary Theory

D. To End

E. Bibliographical Note

of Complex Dynamical Systems (New York: Springer-Verlag, 1986);

for the Classroom: Part One – Introduction to Fractals and Chaos (New

Foundations and Applications (New York: John Wiley and

Theory of Economic Change (Cambridge, MA: Belknap Press

Appendix A: Meinhard v. Salmon 249 N.Y. 458 (1928)

Appendix B: Glossary

Appendix C: Mathematica Notebooks

A. Differential Equations in Law: The Effect of Terminating Affirmative Action

i. Determine the Participation in the Workforce

ii. Add the Initial Condition

iii. Manipulate the Exponent to See It Disappear

iv. The Long-Run Participation

v. The Composition of the Candidates

vi. Graphics

B. Derivation of the Normal Distribution

i. Derive the Normal Distribution as Gauss Did

ii. The Standard Normal Distribution

iii. Restating with Standard Deviation

iv. Restating with Average Deviation

v. The Triangular Distribution

C. Application of Triangular Distribution: The Uncertain Apprehension of Speed Limit Violations

D. A Comparison of Insider Trading Regimes

i. Foundation

ii. Problem

iii. Solution: Statement

iv. Solution: Proof

v. Illustration of Price Path

Index