Leeson on Trial by Combat and the Coase Theorem

I have been researching trial by combat for a project I hope to undertake in the near future. In the process I read Peter Leeson's article, Trial by Battle (3 J. Legal Analysis 341 (2011)). It is one of the most fascinating things I have read in some time, and the first three paragraphs of the introduction give a good summary of Leeson's argument:

Modern legal battles are antagonistic and acrimonious. But they aren't literally battles. Disputants don't resolve conflicts with quarterstaffs. Their lawyers don't fight to the death. This wasn't always so. For over a century England's judicial system decided land disputes by ordering disputants' legal representatives to bludgeon one another before an arena of spectating citizens. The victor won the property right for his principal. The vanquished lost his cause and, if he were unlucky, his life. People called these combats trials by battle.

To modern observers trial by battle is an icon of medieval backwardness. Montesquieu called it "monstrous." The institution's barbarity seems equaled only by its senselessness. As Richard Posner put it, "trial by battle" is one of those "legal practices that no one defends any more."

Almost no one. This paper defends trial by battle. It examines trial by battle in England as judges used it to decide property disputes from the Norman Conquest to 1179. I argue that judicial combat was sensible and effective. In a feudal world where high transaction costs confounded the Coase theorem, trial by battle allocated disputed property rights efficiently. (citations omitted).

I previously blogged about trial by combat here. Leeson's article recounts the practice in detail and his approach to the practice from an economic perspective makes Trial by Battle the most interesting article I have read since R.S. Radford's, Going to the Island: A Legal and Economic Analysis of the Medieval Icelandic Duel (62 S. Cal. L. Rev. 615 (1989)).

In case you were wondering, Radford's article is also related to my current project. I will hopefully have more on that later.

Rumblings About Klass and Zeiler's Critique of the Endowment Effect

The UCLA Law Review recently published its first issue of Volume 61, which contains an article by Gregory Klass and Kathryn Zeiler entitled, Against Endowment Theory: Experimental Economics and Legal Scholarship.  Here is the abstract:

Endowment theory holds the mere ownership of a thing causes people to assign greater value to it than they otherwise would. The theory entered legal scholarship in the early 1990s and quickly eclipsed other accounts of how ownership affects valuation.  Today, one finds appeals to a generic “endowment effect” throughout the legal literature. Recent experimental results, however, suggest that the empirical evidence for endowment theory is weak at best. When the procedures used in laboratory experiments are altered to rule out alternative explanations, the “endowment effect” disappears. This and other recent evidence suggest that mere ownership does not affect willingness to trade or exchange. Many experimental economists no longer ascribe to endowment theory. Legal scholars, however, continue to rely on endowment theory to predict legal entitlements’ probable effects on expressed valuations. That reliance is no longer warranted. Endowment theory’s influence in legal scholarship provides important lessons about how legal scholars and policymakers should, and should not, use results from experimental economics.

Miriam Baer of PrawfsBlawg points out that the article "encapsulates quite succinctly the problems with relying on behavioral theories that have been successfully challenged or revised since their first introduction to legal scholars."  The Economist covers the earlier experiments by Charles Plott and Kathryn Zeiler that led to the conclusions discussed in the UCLA Law Review article.

In the PrawfsBlawg comments, Matt Bodie contends that the endowment theory has not been disproven and that Zeiler has a "conflict of interest" in speaking about social science research because she is one of the co-authors of the studies that the Klass and Zeiler article cites as disproving the endowment effect.

While it is difficult to know exactly what goes on in the minds of articles editors (I should know, since I am one -- and for the UCLA Law Review, no less!) I suspect that the articles editors of the UCLA Law Review were aware of Zeiler's co-authorship of the previous research, and did not find that a "conflict of interest" existed when she was stating a conclusion supported by previous studies that she had done.  Baer responds to Bodie's comment by pointing out that Zeiler is a law professor, and that it makes sense for her to re-iterate her social science findings in the context of legal scholarship.

I think that Baer makes a good point, and I will speculate that the UCLA Law Review's articles editors likely had the same consideration in mind.  They probably also thought that Klass and Zeiler's discussion of the endowment effect made a larger point about the danger of legal scholarship's tendency to miss developments in other disciplines -- and that these developments might have a substantial impact on foundational assumptions of legal theories.

For more criticism of Klass and Zeiler's argument, see Russell Korobkin's chapter, Wrestling with the Endowment Effect, or How to Do Law and Economics Without the Coase Theorem, which will appear in the Oxford Handbook of Behavioral Economics and the Law.