Learning by observing the past decisions of others can help explain some otherwise puzzling phenomena about human behavior. For example, why do people tend to converge on similar behavior? Why is mass behavior prone to error and fads? The authors argue that the theory of observational learning, and particularly of informational cascades, has much to offer economics, business strategy, political science, and the study of criminal behavior.

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Learning from the behavior of others : conformity, fads, and informational cascades

Author(s): Botero, Juan; Djankov, Simeon; La Porta, Rafael; Lopez-de-Silanes, Florencio; Shleifer, Andrei | Abstract: We investigate the regulation of labor markets through employment, collective relations, and social security laws in 85 countries. We find that the political power of the left is associated with more stringent labor regulations and more generous social security systems, and that socialist, French and Scandinavian legal origin countries have sharply higher levels of labor regulation than do common law countries. However, the effects of legal origins are larger, and explain more of the variation in regulations, than those of politics. Heavier regulation of labor is associated with lower labor force participation and higher unemployment, especially of the young. These results are most naturally consistent with legal theories, according to which countries have pervasive regulaory styles inherited from the transplantation of legal systems.

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The Regulation of Labor

This famous passage from Marshall’s Principles of Economics (it first appeared in the fifth edition which came out in 1907) nicely brings out two issues, which are as germane to economics today as they were when Marshall wrote. The first is the heavy reliance by economists in their formal theorizing on the notion of “equilibrium”. The other is the appeal that “biological conceptions3x201D; have for many economists, particularly when their focus is on economic change.

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Recent Evolutionary Theorizing About Economic Change

An important step in extending the traditional theory of individual rational choice to analyze social issues beyond those usually considered by economists is to incorporate into the theory a much richer class of attitudes, preferences, and calculations. While this approach to behavior builds on an expanded theory of individual choice, it is not mainly concerned with individuals. It uses theory at the micro level as a powerful tool to derive implications at the group or macro level. The lecture describes the approach and illustrates it with examples drawn from my past and current work.

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Nobel Lecture: The Economic Way of Looking at Behavior

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Preventing Crime: What Works, What Doesn't, What's Promising. Research in Brief. National Institute of Justice.

INTELLECTUAL property is a natural field for economic analysis of law,1 and copyright is an important form of intellectual property. Yet while there are good introductions to the economics of copyright law, and a number of excellent articles on the economics of copying (as distinct from copyright law),2 no article examines the field of copyright as a whole, discussing the evolution and major doctrines in the law from an economic

An Economic Analysis of Copyright Law

Introduction 1. The Economic Theory of Property 2. How to Think about Copyright 3. A Formal Model of Copyright 4. Basic Copyright Doctrines 5. Copyright in Unpublished Works 6. Fair Use, Parody, and Burlesque 7. The Economics of Trademark Law 8. The Optimal Duration of Copyrights and Trademarks 9. The Legal Protection of Postmodern Art 10. Moral Rights and the Visual Artists Rights Act 11. The Economics of Patent Law 12. The Patent Court: A Statistical Evaluation 13. The Economics of Trade Secrecy Law 14. Antitrust and Intellectual Property 15. The Political Economy of Intellectual Property Law Conclusion Acknowledgments Index

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The Economic Structure of Intellectual Property Law

Written by a lawyer and an economist, this is the first full-length economic study of tort law--the body of law that governs liability for accidents and for intentional wrongs such as battery and defamation. Landes and Posner propose that tort law is best understood as a system for achieving an efficient allocation of resources to safety--that, on the whole, rules and doctrines of tort law encourage the optimal investment in safety by potential injurers and potential victims. The book contains both a comprehensive description of the major doctrines of tort law and a series of formal economic models used to explore the economic properties of these doctrines. All the formal models are translated into simple commonsense terms so that the math less reader can follow the text without difficulty; legal jargon is also avoided, for the sake of economists and other readers not trained in the law. Although the primary focus is on explaining existing doctrines rather than on exploring their implementation by juries, insurance adjusters, and other real world actors, the book has obvious pertinence to the ongoing controversies over damage awards, insurance rates and availability, and reform of tort law-in fact it is an essential prerequisite to sound reform. Among other timely topics, the authors discuss punitive damage awards in products liability cases, the evolution of products liability law, and the problem of liability for mass disaster torts, such as might be produced by a nuclear accident. More generally, this book is an important contribution to the law and economics movement, the most exciting and controversial development in modern legal education and scholarship, andwill become an obligatory reference for all who are concerned with the study of tort law.

The Economic Structure of Tort Law

IN the folklore of criminal justice a popular belief is that the accused will have his case decided in a trial. Empirical evidence does not support this belief. Table 1 indicates that most cases are disposed of before trial by either a guilty plea or a dismissal of the charges. What factors determine the choice between a pre-trial settlement and a trial? What accounts for the large proportion of settlements compared to trials? How are certain aspects of the criminal justice process such as the bail system and court delay related to the decision to settle or to go to trial? The main purpose of this essay is to answer these questions by means of a theoretical and empirical analysis of the criminal justice system using standard tools of economic theory and statistics.

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An Economic Analysis of the Courts

We believe that at a deeper level the independent judiciary is not only consistent with, but essential to, the interest-group theory of government. Part I of this paper explains our theory of the independent judiciary. Part II discusses several implications of the theory, relating to administrative regulation, the form of interest-group legislation, the tenure of judges, and constitutional adjudication. The appendix to this paper presents an empirical analysis of judicial independence using data on Acts of Congress that have been held unconstitutional by the Supreme Court.

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William M. Landes

Papers

An Economic Analysis of Copyright Law

The Economic Structure of Intellectual Property Law

The Economic Structure of Tort Law

An Economic Analysis of the Courts

The Independent Judiciary in an Interest-Group Perspective