Document Type

Article

Comments

Review of Law and Economics, Vol. 1, pp. 203-240 (2005)

Abstract

Many legal rules can be interpreted as creating options. Option pricing is thus important for understanding the ex ante effects of these rules. And, recognizing that individuals, whose behavior the law aims to influence, are imperfectly rational, a behavioral option pricing model is a potentially helpful tool for legal policy. This paper develops such a model and applies it to a series of legal problems in tort law, contract law, corporate law and criminal law.

Date of Authorship for this Version

March 2005

Keywords

Options, behavioral law and economics, optimism, overconfidence

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