The legal analyst: a toolkit for thinking about the law

357 Pages·2007·1.113 MB·English

by  Farnsworth, Ward

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Praise for “The Legal Analyst”
“Every good lawyer knows that there’s a standard set of argumentative moves
that are repeatedly made in different legal settings. Farnsworth’s book is
chock full of the kind of tools that every legal analyst should have in his or
her back pocket. This ambitious book is likely to spur a lively debate about
what exactly are the essential tools of legal analysis. While some will grouse
that their pet tool was excluded, the book points toward a new way of orga-
nizing the first-year curriculum. Farnsworth is forging a new pedagogical
canon.”
ian ayres, Townsend Professor, Yale Law School
and author of Super Crunchers
“This is an outstanding book. It occupies a significant and unique niche in
the literature of jurisprudence and legal methodology. The beauty of this
book is that it introduces students and practitioners alike to basic methods
of analysis of legal rules and outcomes across a broad range of disciplines
(economics, psychology, sociology, jurisprudence, and evidence). This
should become the ultimate ‘toolbox’ for those new to, or simply interested
in, the profession.”
david j. bederman, Emory University School of Law
“The Legal Analyst provides an engaging and enlightening introduction to
the most essential concepts of legal reasoning. In exceptionally clear prose,
Ward Farnsworth walks the reader through concepts such as the Coase theo-
rem, the prisoner’s dilemma, and property rules and liability rules—peeling
away the fog of confusion that often envelops them to reveal the deep and
startlingly simple insights that they offer. The reader comes away from the
book with a toolkit of ideas that can be used to take apart and examine al-
most any legal issue.”
oona a. hathaway, Yale Law School
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The Legal Analyst

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The Legal Analyst
A Toolkit for Thinking about the Law
Ward Farnsworth
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The University of Chicago Press Chicago and London
For Ward Farnsworth, Sr.
The University of Chicago Press, Chicago 60637
The University of Chicago Press, Ltd., London
© 2007 by The University of Chicago
All rights reserved. Published 2007
Printed in the United States of America
16 15 14 13 12 11 10 09 08 2 3 4 5
ISBN-13: 978-0-226-23834-0 (cloth)
ISBN-13: 978-0-226-23835-7 (paper)
ISBN-10: 0-226-23834-2 (cloth)
ISBN-10: 0-226-23835-0 (paper)
library of congress cataloging-in-publication data
Farnsworth, Ward, 1967–
The legal analyst : a toolkit for thinking about the law /
Ward Farnsworth.
p. cm.
Includes bibliographical references and index.
ISBN-13: 978-0-226-23834-0 (cloth : alk. paper)
ISBN-10: 0-226-23834-2 (cloth : alk. paper)
ISBN-13: 978-0-226-23835-7 (pbk. : alk. paper)
ISBN-10: 0-226-23835-0 (pbk. : alk. paper)
1. Law—Methodology. 2. Sociological jurisprudence.
3. Law and economics. 4. Law—Psychological aspects.
I. Title.
k212.f37 2007
340'.11—dc22
2006039091
∞ The paper used in this publication meets the minimum
requirements of the American National Standard for
Information Sciences—Permanence of Paper for Printed
Library Materials, ANSI Z39.48-1992.
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Contents
Preface · vii
Acknowledgments · xi
Part I. Incentives
1 Ex Ante and Ex Post · 3
2 The Idea of Efficiency · 13
3 Thinking at the Margin · 24
4 The Single Owner · 37
5 The Least Cost Avoider · 47
6 Administrative Cost · 57
7 Rents · 66
8 The Coase Theorem · 75
Part II. Trust, Cooperation,
and Other Problems for Multiple Players
9 Agency (with Eric Posner) · 87
10 The Prisoner’s Dilemma · 100
11 Public Goods · 109
12 The Stag Hunt · 117
13 Chicken · 126
14 Cascades · 136
15 Voting Paradoxes · 144
16 Suppressed Markets (with Saul Levmore) · 152
Part III. Jurisprudence
17 Rules and Standards · 163
18 Slippery Slopes (with Eugene Volokh) · 172
19 Acoustic Separation · 182
20 Property Rules and Liability Rules · 188
21 Baselines · 198
Part IV. Psychology
22 Willingness to Pay and Willingness to Accept:
The Endowment Effect and Kindred Ideas · 209
23 Hindsight Bias · 218
24 Framing Effects · 224
25 Anchoring · 230
26 Self-Serving Bias, with a Note on Attribution Error · 237
Part V. Problems of Proof
27 Presumptions · 249
28 Standards of Proof · 257
29 The Product Rule · 273
30 The Base Rate · 281
31 Value and Markets · 294
Notes · 305
Author Index · 329
Subject Index · 335
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Preface
This book is a collection of tools for thinking about legal questions. It
attempts to gather the most interesting ideas one learns about in law
school—or should learn, or might wish to have learned—and explain
them in plain language with lots of examples of how they work. The result
is a kind of user’s guide meant to be helpful to a wide range of people:
law students, lawyers, scholars, and anyone else with an interest in the le-
gal system. An alternative title for the book, Thinking Like a Law Professor,
might have been more descriptive but was rejected by the focus groups as
ambiguous, as it might be construed as a threat rather than a promise.
That is a short account of this book and its purpose. A more detailed
one has to begin with the way law usually is taught, which often seems
to me to be upside down. There are, in general, two sorts of things one
learns at a law school. First, there are lots of legal rules—principles that
tell you whether a contract is valid, for example, or when people have to
pay for accidents they cause, or what the difference is between murder
and manslaughter. Second, there are tools for thinking about legal prob-
lems—ideas such as the prisoner’s dilemma, or the differences between
rules and standards, or the notion of a baseline problem, or the problem
of hindsight bias. Some of them are old matters of jurisprudence; a larger
share have been imported into the law schools more recently from other
disciplines, such as economics or psychology. In either event, these tools
for thought are by far the more interesting, useful, and fun part of a legal
education. They enable you to see more deeply into all sorts of questions,
old and new, and say better, more penetrating things about them.
The problem is that law schools generally don’t teach those tools care-
fully or systematically. One might imagine it otherwise: law school courses
could be organized around tools rather than legal subjects, so that in the
first year everyone would take a course on the prisoner’s dilemma and
other ideas from game theory, a little course on rules and standards, a
course on cognitive psychology, and so on, and in each of those classes
one would learn, along the way, a bit about contract law, a bit about tort
law, and a bit about all the other major subjects. But instead law school
is carved up the other way around: by legal topics, not by tools. There