Economics 391

ECON 391: Law and Economics

Prerequisite: ECON 206

Credit Hours: (3)

Analyzes the application of economic theory in the American judicial system. Investigates the choice of legal rules and regulations on the incentives faced by individuals. Considers the influence of economic development on the evolution of law.


Detailed Description of Content of the Course

Topic Outline


1. The Nature of Property Rights
2. Cooperation and Coercion
3. Concepts of Justice
4. Behavior Involving Uncertainty
5. Intertemporal Adjustments of Benefits and Costs
6. Economic Expertise in Legal Proceedings


This course is primarily concerned with investigating the behavioral implications of alternative legal doctrines and policies. Initially, attention is given to defining institutions and the nature of the problems that led to their formation. This will be accomplished by first discussing the characteristics of property rights in Western societies. Then, simple examples from game theory will be reviewed to understand how conflicts among individuals within a society might be resolved.

The question of what constitutes justice in conflict resolution is then addressed. Specifically, whether justice is an outcome of a process is discussed. The notion of Pareto optimality and the Coase theorem are introduced, opening up the question of the role of economic development in determining justice.

Incorporated into this philosophical agenda is an analysis of court cases and problems in situational ethics which are concerned with human choice under alternative rules. Becoming more specific, court cases related to liability (torts) are reviewed. The economic costs and the effects on behavior involving uncertainty of alternative legal choices are analyzed and the influence of economics on the courts' actual decisions are considered.

A second area of law which involves economics is the evaluation of benefits and costs over time. Cases related to the evaluation of leaseholds, payments of interest, and foregone earnings are reviewed.

Finally, the role of the economist in legal proceedings is described. This involves looking at how theory and fact are addressed in expert testimony.


Detailed Description of Conduct of the Course

The following teaching strategies will be employed:


Lecture, discussion, role-playing/simulating, oral communications activities.


Goals and Objectives of the Course

1. Identify the fundamental issues and processes in the operation of legal institutions of economic significance.
2. Development of skills with which to analyze and predict the performance of alternative institutional designs.
3. Review of the impact of economic change on the historical evolution of law in the Common Law tradition.


Assessment Measures

  • Three Mid-Term Exams 20% Each
  • Review of Journal Article 10%
  • Oral Communications Activity 20%
  • Final Exam 20%


Other Course Information


Review and Approval

Date Action Reviewed by
December 2004 Made alterations to syllabus N. Hashemzadeh, Chair  
Revised 4/13/09 Charles Vehorn
April 16, 2012 Revised