《Game Theory and the Law》

Introduction: Understanding Strategic Behavior1

Bibliographic Notes4

1 Simultaneous Decisionmaking and the Normal Form Game6

The Normal Form Game6

Using Different Games to Compare Legal Regimes14

The Nash Equilibrium19

Civil Liability, Accident Law, and Strategic Behavior24

Legal Rules and the Idea of Strict Dominance28

Collective Action Problems and the Two-by-Two Game31

The Problem of Multiple Nash Equilibria35

Summary46

Bibliographic Notes46

2 Dynamic Interaction and the Extensive Form Game50

The Extensive Form Game and Backwards Induction50

A Dynamic Model of Preemption and Strategic Commitment57

Subgame Perfection63

Summary75

Bibliographic Notes77

3 Information Revelation, Disclosure Laws, and Renegotiation79

Incorporating Beliefs into the Solution Concept80

The Perfect Bayesian Equilibrium Solution Concept83

Verifiable Information, Voluntary Disclosure, and the Unraveling Result89

Disclosure Laws and the Limits of Unraveling95

Observable Information, Norms, and the Problem of Renegotiation109

Optimal Incentives and the Need for Renegotiation112

Limiting the Ability of Parties to Renegotiate116

Summary118

Bibliographic Notes119

4 Signaling, Screening, and Nonverifiable Information122

Signaling and Screening122

Modeling Non verifiable Information125

Signals and the Effects of Legal Rules142

Information Revelation and Contract Default Rules147

Screening and the Role of Legal Rules153

Summary156

Bibliographic Notes157

5 Reputation and Repeated Games159

Backwards Induction and Its Limits159

Infinitely Repeated Games, Tacit Collusion, and Folk Theorems165

Reputation, Predation, and Cooperation178

Summary186

Bibliographic Notes186

6 Collective Action, Embedded Games, and the Limits of Simple Models188

Collective Action and the Role of Law189

Embedded Games191

Understanding the Structure of Large Games195

Collective Action and Private Information202

Collective Action Problems in Sequential Decisionmaking208

Herd Behavior213

Summary217

Bibliographic Notes217

7 Noncooperative Bargaining219

Modeling the Division of Gains from Trade219

Legal Rules as Exit Options224

Bargaining and Corporate Reorganizations232

Collective Bargaining and Exit Options237

Summary241

Bibliographic Notes241

8 Bargaining and Information244

Basic Models of the Litigation Process244

Modeling Separate Trials for Liability and Damages251

Information and Selection Bias260

Discovery Rules and Verifiable Information261

Summary266

Bibliographic Notes266

Conclusion: Information and the Limits of Law268

Notes275

References289

Glossary301

Index319