Law and Economics for Civil Law Systems

Law and Economics for Civil Law Systems

Ejan Mackaay

Ejan Mackaay offers a comprehensive look at the essential points of economic reasoning, the Coase Theorem, and legal institutions such as intellectual property, extra-contractual civil liability and contracts. The book’s structure mirrors the way law is taught in civil law countries, with structured presentations, references to civil code articles paired with non-technical explanations, and limited reliance on graphs. This English-language version builds on the success of the author’s 2008 French-language textbook on law and economics from a civil law perspective.

Chapter 2: Risk and insurance

Ejan Mackaay

Subjects: law - academic, comparative law, law and economics


Economic players make decisions not just about sure things (whether or not to order an espresso and a croissant at the neighbourhood café), but also about things that involve some element of chance or uncertainty. When you buy a lottery ticket, you know that you may win, but can scarcely be sure of it. You decide to go to law school to improve your chances of finding a well- paying job. When developers decide to build condominiums in the Mont Tremblant area north of Montreal, they gamble on attracting many new buyers who will allow them to earn back the considerable investment they put in up front. All of these situations involve uncertainty, but the uncertainty is of different kinds. In the case of the lottery, the odds of winning are known, and often even disclosed. Whether you improve your prospects by studying law is a moot point. The market for lawyers and notaries is said to be ‘saturated’, though what that might mean in an open economy is a moot point. But since your choice of studying law is far from unusual, there are statistics to tell you your chances of improving your prospects.

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