¹ For a more technical, detailed review of the economics literature, see Cooter and Rubinfeld (1989).

² The Coase theorem is usually stated something like, “The legal allocation of rights does not matter from the viewpoint of economic efficiency so long as no obstacles hinder their exchange.” The theorem is suggested, but not explicitly stated, in Coase (1960).

³ An important distinction is whether or not victims and injurers act strategically with respect to each other. To illustrate, the care I take in crossing the street does not influence the care taken by drivers, so I need not act strategically. Alternatively, a manufacturer may believe that greater safety in the design of machinery will cause workers to take less care when using it, in which case the manufacturer will act strategically.

⁴ For fee arrangements, see Danzon (1983); for adjustments to compensatory damages, see Polinsky and Rubinfeld (1988). One example is given by Geoffrey Miller's (1986) analysis of rule 68 of the Federal Rules of Evidence. Rule 68 specifies that a losing party must pay certain of the winner's court costs. Whether such a move will improve efficiency is naturally formulated in terms of comparing the frequency of trial in two equilibriums—the first with and the second without rule 68.

⁵ Rubinfeld and Sappington (1987) provide one theoretical application and a review of the relevant literature.

⁶ See, e.g., P'ng (1983), Shavell (1982), and Perloff and Rubinfeld (1988).

⁷ “Reasonable” in this context refers to the Nash bargaining solution, in which the parties share the surplus from bargaining equally.

⁸ One example involves the debate as to whether a comparative negligence rule is more efficient than a traditional negligence rule (see, e.g., Haddock and Curran, 1985; Rubinfeld, 1987; Cooter and Ulen, 1986). Another involves the question of whether the British rule in which losing litigants pay litigation costs is more efficient than the U.S. rule in which both sides pay their own costs (Shavell, 1982; Katz, 1988; and Braeutigam et al., 1984).

⁹ For a discussion of dynamic efficiency, see Landes and Posner (1979) and Blume and Rubinfeld (1982).

¹⁰ The endogeneity of litigation rates has obvious statistical implications for researchers who attempt to estimate a structural longitudinal model of the litigation process. Endogeneity requires a simultaneous-equations estimator, which in turn requires a suitable choice of instruments. The theoretical and data demands associated with this view are likely to prove challenging.

¹¹ This possibility was first raised by Rubin (1977). See also Priest (1977) and Goodman (1978).

¹² A precise statement of the conditions for such evolution is found in Cooter and Kornhauser (1980).

¹³ See Dam (1975), Rosenfield (1976), and Kornhauser (1983) for some examples.

¹⁴ An exception to this pessimistic conclusion concerns laws that are vague. Bargaining games are hard to settle when the parties do not know each others' threat points. See Hoffman and Spitzer (1982). So vague laws cause litigation. Laws whose inefficiency derives from their vagueness will tend to be litigated until inefficiency is diminished by a clear allocation of the underlying entitlements.

¹⁵ See Hofstra Law Review (1980).

¹⁶ For an empirical study of judicial behavior, see Denzau (1979).

¹⁷ There is, however, a tendency to return incumbents in judicial elections, and many judges first acquire their position by appointment to complete the term of an elected judge who retires (Bell and Price, 1982).

¹⁸ Perhaps, however, judges shape their opinions with promotion within the judiciary in mind. Most lawyers are skeptical of this hypothesis, because promotion, being tied to the vagaries of politics, seems random and unpredictable. Empirical attempts to correlate judicial promotion with attributes of judges' opinions have reached negative conclusions. There is, e.g., apparently no correlation between judges who avoid having their opinions overturned on appeal and judges who get promoted within the federal system (Higgins and Rubin, 1980).