Game theory, behaviour, and the law

Course description

The course provides a brief overview of the main equilibrium concepts in game theory and then presents several applications to legal topics. Its purpose is to provide a critical methodology and the tools to analyze how individuals respond to incentives in strategic environments.

TOPICS

1. A brief introduction to game theory. Rules of the game and equilibrium concepts. Behavioral Games: Ultimatum and Dictator Games. Entitlement and Framing effects.

(31 Jan. 2018, 9.30 – 12.30, Seminar Room, Department of Economics, Strada Maggiore 45)

Readings:

Introductory readings:

  • Gibbons, R.: A Primer in Game Theory, Robert Gibbons, Pearson, 1992. 1, Section 1.1. Ch. 2, Section 2.1.A.

For a “softer” intro: 

  • Ayres, Ian (1990) “Playing Games with the Law”, Stanford Law Review, 42: 1291-1317.

Topics:

  • Henrich et al. 2005. ”’Economic Man’ in Cross-Cultural Perspective: Behavioral Experiments in 15 Small-scale Societies,” Behavioral and Brain Sciences, 28(6), pp. 795-815.
  • Hoffman, McCabe, Shachat and Smith (1994), Preferences, Property Rights and Anonymity in Bargaining Games, Games and Economic Behavior, 7: 346-80.

2. Psychological games: Inequality aversion, fairness and guilt. Reciprocity. Trust games

(7 Feb. 2018, 9.30 – 12.30, Seminar Room, Department of Economics, Strada Maggiore 45)

Readings:

Introductory readings:

  • Attanasi, G., & Nagel, R. (2008). A Survey of Psychological Games: Theoretical Findings and Experimental Evidence. In A. Innocenti & P. Sbriglia (Eds.), Games, Rationality and Behavior. Essays on Behavioral Game Theory and Experiments (pp. 1–33).

Topics:

  • Fehr, E. and Schmidt, K.M. (1999), “A theory of fairness, competition and cooperation”, Quarterly Journal of Economics, 114: 817-868.
  • Rabin, M. (1993), “Incorporating fairness into game theory and economics”, American Economic Review, 83: 1281-1302.
  • Berg, J., J. Dickhaut and K. McCabe (1995). “Trust, Reciprocity and Social History.” Games and Economic Behavior, 10: 122-142.


3. Public good games. Public and Private Enforcement. Expressive and Inexpressive Law.

(14 Feb. 2018, 9.30 – 12.30, Seminar Room, Department of Economics, Strada Maggiore 45)

Readings:

Introductory readings:

  • Fehr, Ernst and Simon Gächter (2000). “Cooperation and Punishment in Public Goods Experiments.” American Economic Review, 90, 980–994.
  • McAdams, Richard H. (2000a). “A Focal Point Theory of Expressive Law.” Virginia Law Review 86: 1649–1729. Available at SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=278773.

Topics:

  • Cinyabuguma, M., Page, T., & Putterman, L. (2006). Can second-order punishment deter perverse punishment? Experimental Economics, 9(3), 265–279.
  • Fehr, Ernst, and Urs Fischbacher. 2004. “Third-party Punishment and Social Norms.” Evolution and Human Behavior 25 (2) (March): 63–87.
  • Galbiati, R. and Vertova, P. (2008). "Obligations and Cooperative Behaviour in Public Good Games." Games and Economic Behavior 64(1), pp.146-170.
  • Markussen, T., L. Putterman and J.-R. Tyran (2016). Judicial Error and Cooperation. European Economic Review 89: 372-388.
  • McAdams, R. H. and J. Nadler (2005). “Testing the Focal Point Theory of Legal Compliance: Expressive Influence in an Experimental Hawk/Dove Game.” Journal of Empirical Legal Studies 2: 87–123. Available at SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=431782.
  • Carbonara, E. F. Parisi and G. von Wangenheim (2012). “Unjust Laws and Illegal Norms”, International Review of Law and Economics: pp. 285 – 299. Available at SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1088742.

4. Positive and Negative Incentives. Prospect Theory.

(21 Feb. 2018, 9.30 – 12.30, Seminar Room, Department of Economics, Strada Maggiore 45)

Readings:

Introductory readings:

  • Fehr, Ernst and Falk, Armin (2002). “Psychological foundations of incentives”. European Economic Review, 4-5: 687 – 724.
  • Bowles, Samuel and Hwang, Sung – Ha (2008). “Social preferences and public economics: Mechanism design when social preferences depend on incentives”. Journal of Public Economics, 8-9: 1811 – 1820.
  • Tversky, A. and D. Kahneman (1981). “The Framing of Decisions and the Psychology of Choice”. Science: 453-58.

Topics:

  • Dari-Mattiacci, Giuseppe e Gerrit De Geest (2010). “Carrots, Sticks and the Multiplication Effect.” Journal of Law, Economics and Organization, 26. Available at SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1026762.
  • Feher, Ernst e Bettina Rockenbach (2003), “Detrimental effects of sanctions on human altruism”, Nature, 422, pp.137-140.
  • Gneezy, Uri e Aldo Rustichini (2000), “A Fine is a Price.” Journal of Legal Studies 29(1) 1-17.
  • Gürek, Ö., B. Irlenbusch and B. Rockenbach (2009). “Motivating Teammates: The Leader’s Choice Between Positive and Negative Incentives.” Journal of Economic Psychology 30: 591 – 607.

5. Expanding traditional game theory: Evolutionary Games. Social norms. Discrimination.

(28 Feb. 2018, 9.30 – 12.30, Seminar Room, Department of Economics, Strada Maggiore 45)

Readings:  

Introductory readings:

  • Dixit, Avinash K., Reiley, David H. Jr. and Skeath, Susan (2009), Games of Strategy, 3rd Edition, Norton, New York. Chapter 13.
  • Carbonara, E. (2017). “Law and Social Norms”. Forthcoming, in Parisi, F. (ed.), The Oxford Handbook of Law and Economics: Methodology and Concepts, Oxford University Press, Oxford, UK.

Topics:

  • Carbonara, Emanuela and Pasotti, Piero (2010) “Social Dynamics and Minority Protection”, International Review of Law and Economics, 40(4): 317-328. Available at SSRN: http://ssrn.com/abstract=906635.

Teaching materials