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Optional Law

The Structure of Legal Entitlements

Spurred by the advances in option theory that have been remaking financial and economic scholarship over the past thirty years, a revolution is taking shape in the way legal scholars conceptualize property and the way it is protected by the law. Ian Ayres’s Optional Law explores how option theory is overthrowing many accepted wisdoms and producing tangible new tools for courts in deciding cases.
Ayres identifies flaws in the current system and shows how option theory can radically expand and improve the ways that lawmakers structure legal entitlements. An option-based system, Ayres shows, gives parties the option to purchase—or the option to sell—the relevant legal entitlement. Choosing to exercise a legal option forces decisionmakers to reveal information about their own valuation of the entitlement. And, as with auctions, entitlements in option-based law naturally flow to those who value them the most. Seeing legal entitlements through this lens suggests a variety of new entitlement structures from which lawmakers might choose. Optional Law provides a theory for determining which structure is likely to be most effective in harnessing parties’ private information.
Proposing a practical approach to the foundational question of how to allocate and protect legal rights, Optional Law will be applauded by legal scholars and professionals who continue to seek new and better ways of fostering both equitable and efficient legal rules.


"Optional Law is a tour de force. Ian Ayres shows us how option theory can connect a set of important legal concepts with a breadth that spans areas of contracts, property, and torts. Through the course of this book, Ayres works from a treasure trove of methodology that includes finance theory, game theory, and auction theory."

Barry E. Adler | Barry E. Adler

"Ian Ayres is one of the great innovators of our time in the legal academy. In Optional Law, he firmly establishes options theory as a valuable tool of legal analysis, and uses it to reveal the underappreciated potential of liability rules to improve both the efficiency and fairness of legal outcomes. True to form, Ayres marries theoretical creativity, clear exposition, and a sense of practical feasibility, in a product that will have a profound impact on the way we understand legal rights."

George Triantis | George Triantis

"Options theory has many potential applications to law, and with his new book Ian Ayres, a pioneer in the field, seeks to bring the concepts into practice. Ayres demonstrates that legal remedies structured like options can effectively reveal parties’ personal valuations, an insight that could help courts to achieve more efficient allocations of entitlements."

Pul G. Mahoney | Paul G. Mahoney

Table of Contents

Chapter 1: The Bill of Options?
Part One: Bilateral Disputes
Chapter 2: Puts as Well as Calls
Chapter 3: Single-Chooser Rules
Chapter 4: Dual-Chooser Rules
Chapter 5: Higher-Order Liability Rules
Part Two: Extensions
Chapter 6: Correlated Values
Chapter 7: Multiple Takings
Chapter 8: Relaxing Other (Administrative, Informational, and Cognitive) Assumptions
Chapter 9: Bargaining in the Shadow of Different Regimes
Ian Ayres and Eric Talley
Chapter 10: Testing the Bargaining Model
Chapter 11: The Property/Liability Rule Debate

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