Law and Economics.

• Position: Program and Working Group Meetings

The NBER's Program on Law and Economics met in Cambridge on February 8. Program Director Christine Jolls of Yale Law School organized this agenda:

Andrei Shleifer, Harvard University and NBER; Anthony Niblett, Harvard University; and Richard Posner, U.S. Court of Appeals, "The Evolution of a Legal Rule"(NBER Working Paper No. 13856)

Discussant: Richard Holden, MIT and NBER

Suzanne Scotchmer, University of California, Berkeley and NBER, and Nisvan Erkal, University of Virginia, "Scarcity of Ideas and Options for R&D"

Discussant: Louis Kaplow, Harvard Law School and NBER

Edward L. Glaeser, Harvard University and NBER, and Cass R. Sunstein, University of Chicago School of Law, "Extremism and Social Learning" (NBER Working Paper No. 13687)

Discussant: Oliver Hart, Harvard University and NBER

Mireille Jacobson, University of California-Irvine, and Heather N. Royer, Case Western University, "TRAPs: How Do Clinic Regulations Affect the Market for Abortions?"

Discussant: Jeffrey Miron, Harvard University and NBER

3. Fritz Foley, Harvard Business School and NBER, "Welfare Payments and Crime"

Discussant: Lars Lefgren, Brigham Young University

Betsey Stevenson, University of Pennsylvania, "Beyond the Classroom"

Discussant: J. J. Prescott, University of Michigan Law School

John M. de Figueiredo, University of California, Los Angeles and NBER, and Charles M. Cameron, Princeton University, "Endogenous Cost Lobbying: Theory and Evidence"

Discussant: Joshua Fischman, Tufts University

The efficiency of common law rules is central to achieving efficient resource allocation in a market economy. While many theories suggest reasons why judge-made law should tend toward efficient rules, the question of whether the common law actually does converge in commercial areas has remained untested empirically. Shleifer, Niblett, and Posner create a new dataset of 465 state-court appellate decisions involving the application of the Economic Loss Rule in construction disputes and track the evolution of law in this area from 1970 to 2005. They find that over this period the law did not converge to any stable resting point, but evolved differently in different states. They further find that legal evolution is influenced by plaintiffs' claims, the relative economic power of the parties, and nonbinding federal precedent.

Scotchmer and Erkal consider a model of the innovative environment where there is a distinction between ideas for R and D investments and the investments...