Econ Law Final Exam

Front 1

Property Valuation

Back 1

1. Liability Approach
2. Specialized Knowledge
3. Insurance
4. Original Amount Paid

Front 2

Moral Hazard

Back 2

If you shift the individual risk away then the individual no longer has an incentive to personally take actions to minimize that risk

Front 3

Risk aversion

Back 3

When you would prefer a certain outcome that produces slightly less utility than the expected outcome. Rationally giving up expected value for certain value

Front 4

Liability Approach

Back 4

Someone may destroy the initial entitlement if he is willing to pay an objectively determined amount for it
Permission/consent is not required

Front 5

Property Approach

Back 5

The government will enforce a property right by deterring an indivdiual from committing a property violation.

Someone who wishes to buy an entitlement must use a market approach

Front 6

Coase Theorem

Back 6

If you assign property rights over a contested resource where there are 0 transaction costs, the efficient outcome will be reached (property rights assigned to the highest value user)

Front 7

Non-excludable

Back 7

Everyone can use it and you cant exclude people from getting the benefits

Front 8

Rent-seeking

Back 8

Expenditure of resources with no or very little increase in value. Ex. Lobbying/pickpocketing

Front 9

Bounded rationality

Back 9

Individual Makes the rational choice given the presence of uncertainty, transaction costs etc

Front 10

Tort

Back 10

Unconsentual injury/harm done to physical body/property/reputation

Front 11

Objective of the liability approach in tort law

Back 11

Consider all of the costs associated with torts and balance that with the cost of preventing the tort

Front 12

Social Cost of an accident

Back 12

Prob of a loss x Loss + cost of precautions

Front 13

How to neumerically determine the optimal amount of care

Back 13

Calculate the social cost and find the level of care that minimizes the social cost

Front 14

Strict liability

Back 14

The injurer will be liable regardless of the amount of care that they take

Front 15

Negligence

Back 15

Allows the injurer to take up to the cost justified level of care. If they take the cost justifeid level of care or more they are not liable

Front 16

Can first possession be an efficient means of allocating property rights?

Back 16

Yes- if the perosn who possesses the property is the highest value user or there are very low/no transaction costs that would prevent the first possessor from selling the property to the highest value user. However it is not efficient if there is rent seeking associated with first possession

Front 17

Is the right to smoke an injunctive right?

Back 17

No, the right to smoke is an absolute right. However, in some cases people might have an injunctive right to PREVENT people from smoking

Front 18

Is rent seeking efficient

Back 18

Rent seeking is not efficient because it involves the expenditure of resources to create a transfer of value

Front 19

Real externalities

Back 19

When there exists a cost to a third party that is not accounted for in the transaction taking place

Front 20

Pecuniary Externalities

Back 20

Any external cost to a third party is offset by a benefit to someone else that is either greater than or equal to the external cost

Front 21

Eminant Domain

Back 21

The state can force someone to sell their property

Front 22

Why do we need compensation for eminant domain

Back 22

Liability approach= make sure that the government gets the best value for their use. Can choose either fertile or unfertile land.

Front 23

Just Compensation

Back 23

Reflects "fair market value": vlaue to owner may be higher than the fair market value

Front 24

Liability approach for acquisition of property

Back 24

When transaction costs are high you do not want to deter defensive necessity. Not possible to contract or determine a market value ahead of time

Front 25

Adverse possession

Back 25

Can stake a claim on property that has been abandoned by owner

Front 26

What are the unique elements of intellectual property?

Back 26

1. Unique cost structure (rivalry problem)
2. No physical control over how property is used
3. Wide societal benefits