The Coase Theorem and the Prisoner’s Dilemma

The John Marshall Law Review or JMLR has just published our paper (with Orlando I. Martinez-Garcia) “Does the Prisoner’s Dilemma Refute the Coase Theorem?” (Our editors were a little behind schedule, as the official citation to our paper is JMLR, vol. 47, no. 4 (summer 2014), pp. 1289-1318. Yes, by the way, we greatly prefer the MLA or APA citation style–anything but the cumbersome and lame Bluebook used in most law review articles, but this will be the subject of a future blog post.) In our paper, we review two of the most important models in economics and law: the “Coase Theorem” and the “Prisoner’s Dilemma.” In addition, we explore the possible relation between these two influential models through a creative thought-experiment of our own: what would happen if the prisoners in the dilemma were allowed to bargain with each other rather then left incomunicado in separate cells? Would they agree to cooperate (as Coase’s theorem predicts)? Or would they still defect? Other scholars have contemplated this question, but we’re the first to apply the concepts of uncertainty, exponential discounting, and price elasticity to solve this problem. Enjoy …

Image Credit: Giulia Forsythe.
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