Economic Analysis of corporate misconduct

REG522 Economic Analysis of corporate misconduct

Autumn 2020

Spring 2021
  • Topics

    This course provides an introduction to the microeconomic analysis of how liability rules can be used to optimally deter torts, crimes, and regulatory offenses.  The course begins by examining how governments can use laws governing victim’s right to recover damages from people who harmed them accidentally to create optimal incentives for people engaged in risky activities to invest in precautions designed to deter risk. We will examine standard accidents, products liability and medical malpractice.  The next section will examine optimal use of criminal law to deter misconduct. The final section will consider whether, why and how liability should be imposed on corporations when risks were created by (or misconduct was committed by) employees of a company acting on the firm’s behalf—as is this case with products liability, environmental offenses, money laundering, and corruption.  In this section, we first examine basic principal-agent models. We then examine why optimal deterrence requires the use of corporate liability and how corporate liability should be structured. We next examine, understand the value of, and critique the leading statutes governing non-trial corporate resolutions.  Finally, we will discuss corporate liability for securities fraud.

    The course is designed for PhD students enrolled in either an economics, business or finance program, or a program in law and economics. It also would be useful for law students who have studied economics.

  • Learning outcome

    Upon completing this course, the candidate will be able to:  

    Knowledge

    • Apply central concepts in the economics of torts and crime
    • Explain the economic purposes and optimal structure of corporate liability to govern torts, regulatory offenses and crimes

    Skills

    • Apply economic analysis of the use of liability rules to deter risky conduct when victims and potential injurers are in a market relationship: as with products liability and medical malpractice
    • Explain economic analysis of the deterrent effect of civil and criminal law as applied to individuals
    • Describe central economic models of how principals seek to induce agents to engage in the performance that maximizes principals’ welfare when agents’ performance is not observable

    General competence

    • Examine incomplete contracts
    • Explain why corporate liability for securities fraud has a different structure than corporate liability for other offenses
    • Point out the significance of plea bargaining/negotiated settlements in cases of corporate crime (i.e. non-prosecution agreements)

  • Teaching

    The course will be organized with eleven 90 min min lectures held over a period of four days (15-18 June 2020). In addition, students will conduct group work with a group presentation during lecture days.

    All lectures will be held at NHH. 

  • Recommended prerequisites

    The course is designed for PhD students enrolled in either an economics, business or finance program, or a program in law and economics. It also would be useful for law students who have studied economics.

  • Requirements for course approval

    Students must pass a multiple choice digital test organized at a specific time on a few days on the first after the course. The test will address contents of the lectures only. Participants can take the test wherever they are as long as they are ready in the given time window and have good wifi connection. The multiple choice test will be digital (Wiseflow) and automatically assessed. Students with a certain number of correct answers will pass the test. Those who fail will be given a new opportunity to take the test one week later.

  • Assessment

    This course has been cancelled due to the corona pandemic

  • Grading Scale

    Grading: Pass / fail

  • Literature

    TBA

Overview

ECTS Credits
5
Teaching language
English.
Semester

Spring. This course wil not be offered spring 2020

Course responsible

Tina Søreide (IRRR/NHH) and Jennifer Arlen (New York University Law School and associate prof at IRRR/NHH)