The Legal Analyst: A Toolkit for Thinking about the Law

By Ward Farnsworth | Go to book overview

6 Administrative Cost

In chapter 1 we looked at legal rules, including judicial decisions, as ways to give people incentives to hunt whales, but we could have spoken instead of hunting foxes or buffalo. Let’s do that now: suppose you spend all afternoon chasing a buffalo; at last you wound it and it becomes sluggish. As you are closing in to finish the job, I appear from the underbrush and administer the killing blow. Who gets the animal? You have a solid argument of the ex ante variety: letting me win this case would discourage anyone from chasing buffalo next time; everyone would then wait around in hopes of being the one who arrives for the kill at the end rather than the sucker who spends all day tiring out the animal for the benefit of someone else. The result would probably be less buffalo hunting. Some people would substitute activities involving less risk, such as fishing—which is too bad, because evidently they like buffalo better. This outcome is intolerable, or so the argument concludes. It might seem strange to say that you owned the animal just because you had wounded it, but it’s a classic case where a court has to say such a thing to avoid ruining everyone’s incentives. It’s just a rerun of the finback-whaling dispute we talked about earlier.

Except that courts traditionally haven’t said that. They say the buffalo goes to whoever captures it—whoever first reduces it to their possession, which probably will be the hunter who finally killed it, not the one who wounded the animal or tired it out.60 The question is why. It might seem to be a case where all the worries about incentives give way to philosophical notions of ownership: you can’t become the owner of something just by chasing or injuring it. Maybe so, but maybe not; we shouldn’t give up so quickly on the analysis developed in earlier chapters. Remember the reason we’re reluctant to spoil the incentive to hunt: it would be a waste. Everyone likes eating buffalo, and a single owner of the fields where the buffalo roam obviously wouldn’t put up with an outcome like this. He would hunt the animals himself or hire a single team of hunters who wouldn’t get in the way of each other. Put differently, a rule that gives the animal to whoever spent the most time chasing it surely is what the parties would all agree to in advance,

-57-

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The Legal Analyst: A Toolkit for Thinking about the Law
Table of contents

Table of contents

  • Title Page iii
  • Contents v
  • Preface vii
  • Acknowledgments xi
  • Part I - Incentives 1
  • 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 85
  • 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 161
  • 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 207
  • 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 247
  • 27 - Acoustic Separation 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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