Law and Economics

Levitt and Dubner book

Steve Levitt and Stephen Dubner have written Freakonomics: A Rogue Economist Explores the Hidden Side of Everything.  I can't imagine who chose the title.  It is unfortunate in a number of ways, not the least of which is that the title will serve as a pejorative term for those who profess economics.  (Indeed, it has already been gleefully so used by one of my dear colleagues.)  More than that Steve Levitt, if it is he who is referred to as a "rogue economist," is not a rogue.  He is the most recent winner of the John Bates Clark Medal, awarded every two years since 1948 by the American Economics Association to the best economist under the age of 40. 

The book will be available Tuesday, April 12, and can be pre-ordered from Amazon.com here.  Happily for those of us who want more than the book, the authors have a blog, available here. 

I'll write a short review in the next couple of weeks. 

TSU

Monty Hall

I've just finished teaching a section in my law school class on quantitative methods in legal decisionmaking.  I haven't taught this class for six years, and I had forgotten how remarkably unintuitive but fascinating the study of probability can be. 

The class and I have just been discussing the famous Monty Hall problem.  Here's one version of it: 

Suppose that you have been selected to play the final game on "Let’s Make a Deal" -- the famous television show hosted by Monty Hall. You are offered a choice of whatever lies behind one of three doors on the stage. Behind one of those doors is $60,000 in cash; behind each of the other two is a goat. (The prize has been placed behind one of the doors before the game begins; it will not be moved once the game begins; Monte knows where the prize is placed, but he gets nothing out of preventing you from winning—he’s just a showman and wants the game to be fun.)

You make a selection—say, Door #1. Monty turns to his assistant and instructs him to open one of the two doors you did not choose—say, Door #3. And Voila! There is a goat behind Door #3. Only Door #1 and Door #2 now remain closed.

Monty now turns to you and says, “Before we go any further, let me give you three options. First, you may stick with your initial choice, Door #1. Second, you may switch to Door #2. Or third, I’ll give you $35,000 in cash and you may leave the game right now.” (Assume that you are risk neutral.)

Which option should you take?

I'll post an extended analysis in the next couple of days. Be warned! There is so much more to this problem than meets the eye.

TSU

Back in Action - Organ Transplants

For reasons having largely to do with the press of other business, I haven't posted anything for almost three months.  But having been inspired by a talk yesterday by my friend and colleague Larry Ribstein on "The Law and Economics of Blogging," I'm taking to the keyboard anew.  I'll post Larry's paper early next week after he revises it.  It's well worth reading. 

Let me begin by noting that today's Wall Street Journal (page D11) had a story from the Associated Press about organ transplants.  AP reported that there were 27,000 human organs transplanted in 2004, "a record driven by a big jump in donated organs from the dead."  Donations from the deceased in 2004 increased 11 percent over their number in 2003.  There were slightly over 7,000 deceased donors last year, and on average each decedent donated three organs. 

In contrast to the dead, the number of donated organs from the living (mostly kidneys) increased only slightly in 2004, up to almost 7,000.  While most living donors give kidneys, an increasing number are giving portions of their livers or lungs, both of which organs then regenerate to full size in the donor. 

Prior to last year, when deceased donors slightly outnumbered living donors, living donors have outnumbered deceased donors for the previous three years. 

The Department of Health and Human Services reports that approximately 50 percent of all potential deceased donors donate at least one organ.  HHS is engaged in a campaign to increase that rate to 75 percent. 

TSU