The John Marshall Law Review

Volume 47 | Issue 4 Article 8

Summer 2014 Does the Prisoner's Dilemma Refute the Coase Theorem?, 47 J. Marshall L. Rev. 1289 (2014) Enrique Guerra-Pujol

Orlando Martínez-García

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Recommended Citation Enrique Guerra-Pujol & Orlando Martínez-García, Does the Prisoner's Dilemma Refute the Coase Theorem?, 47 J. Marshall L. Rev. 1289 (2014)

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DOES THE PRISONER’S DILEMMA REFUTE THE COASE THEOREM?

ENRIQUE GUERRA-PUJOL1 ORLANDO I. MARTÍNEZ-GARCÍA2

I.Introduction ...... 12911290 II.Standar d Versions of the Prisoner’s Dilemma ...... 12921291 A. Numerical Form ...... 12921291 B. Algebraic or Logic al Form ...... 12961295 III.Coasean Version of the Dilemma (with Strategic and Non- Strategic Bargaining) ...... 12981297 A. A Tale of Two Parables: Parable of the Rancher and the Farmer and Par able of the Prisoners ...... 1298 B. The Three Conditions of the Coase Theor em ...... 13011300 1. Reciprocal Nature of the Prisoner’s Dilemma ..... 13011300 2. Well-Defined Property Rights...... 1301 3. Zero Transaction Costs, Strategic Behavior, and Non-Strategic Bargaining ...... 13011302 4. Strategic Bargaining, Threats and Promises in the Prisoner’s Dilemm a ...... 13011303 5. Non-Strategic Coasean Bargaining...... 13041303 IV. The Role of Uncertainty, Exponential Discounting, and Elasticity in the Coasean Version of the Prisoner’s Dilemma ...... 13071306 A. Uncertainty ...... 13071306 B. Exponential Discounting ...... 13081307 C. Price Elasticity of Demand ...... 13101309 Example #1 ...... 13121313 Example #2 ...... 13121313 Example #3 ...... 13131314 D. Lessons and Discussion ...... 13131314 V.A Brief Digression Regarding the Role of Third Parties in the Prisoner’s Dilemm a ...... 13151314 VI. Some Closing Thoughts on the Complexity of the Prisoner’s Dilemma ...... 13171316 VII.Conc lusion ...... 13181317

1 Lecturer, University of Central Florida, Dixon School of Accounting. College of Business Administration. J.D., Yale Law School. B.A., UCSB. Enrique Guerra-Pujol presented a previous draft of this paper on the morning of December 7, 2013 at the 2013 Northeast People of Color Legal Scholarship Conference held at the University of Puerto School of Law and wishes to thank Taja-Nia Y. Henderson, Orlando Martinez-Garcia, Adys Ann Guerra, Sydjia Robinson, Hamed G. Santaella, Carlitos del Valle, and Judge Jenny Rivera for attending my talk and for their helpful comments and suggestions. 2 Visiting Professor, Interamerican University of Puerto Rico Law School. Adjunct, University of Puerto Rico, Arecibo Campus, Department of Social Science. LL.M., University of Pennsylvania. J.D., Interamerican University of Puerto Rico Law School. B.A.,The American University.

12891290 1290Vol.1168 47:4 Prisoner’s47 JO HN Dilemma MARS HALL and L. Coase REV. Theorem12901168 Vol. 129147:4 different from its predecessors, particularly since it had the benefit of two years of planning. Like the shift in conference scheduling, other changes have taken place within the LatCrit entity, including concerted efforts to continue a process of institutionalization. In recent years, there has been a growing focus on how to capitalize on its critical niche, continue cultivating the next generation of critical scholars, and ensure that the baton of outsider jurisprudence is passed along. Internally, the organization has shifted, including a gradual changing of the guard in leadership,3 so to speak, as well as a downsizing in administration. For example, from 2008 to the present, the Board of Directors was intentionally downsized, with a growing number of Board seats being occupied by junior law I. INTRODUCTION professors. 6 Another major development is LatCrit’s acquisition of a Building upon the main theme of this year’s LatCrit physical space for the organization. The property, Campo Sano Conference, Resistance Rising: Theorizing and Building Cross- (Spanish for “Camp Healthy,” or more literally, “Camp Sanity”), is Sector Movements, 4 this paper (i.e., our contribution to this larger a ten-acre parcel of land located in Central Florida. 7 Purchased by critical conversation) challenges one of the dominant paradigms in LatCrit in 2011, the space is home to The Living Justice Center economics and law: the Coase Theorem. 5 Specifically, we present a and the LatCrit Community Campus. 8 The physical facility serves thought-experiment, what we shall call the “pure Coasean version” as a means “to level the playing field and give LatCrit activists a of the famous Prisoner’s Dilemma game. 6 In brief, what if the fighting chance to be heard.”9 The space is intended prisoners in this game-theory parable were allowed to communicate and bargain with each other instead of being held in to serve as the hub of their educational, research, separate cells, as in the standard version of the dilemma? Would advocacy and activism to remedy the imbalance and our prisoners strike a mutually-beneficial and collectively-optimal deficiencies of the current legal system. Having an Coasean bargain, as the Coase Theorem predicts? 7 Or, as independent physical base has become critical as predicted in the standard one-shot version of the Prisoner’s universities and law schools increasingly are even less Dilemma in which bargaining is not allowed, 8 would they still end

Naming3 A.W. and Tucker, Launching A Two a-Person New DiscourseDilemma: Theof CriticalPrisoner’s Legal Dilemma Scholarship (1950), , as2 HreprintedARV. LATINO in Philip L. REV D.. 1Straffin, (1997). Jr., The Mathematics of Tucker: A Sampler, 14 TWOSee-YEAR alsoC. MLatCritATHEMATICS Biennial J. 228 Conferences (1983). , LATCRIT: LATINA & LATINO CRITICAL4 Latina LEGAL & Latino THEORY Critical, INC .,Legal http://latcrit.org/content/conferences/latcrit Theory, Inc., 2013 Biennial LatCrit- Conferencebiennial-conferences/ Program (lastSchedule visited (andJuly 5,Related 2013) (providingEvents), (2013),a list of availablethe previous at http://latcrit.org/media/medialibrary/2013/10/LatCrit2013_Conference_Prograconferences, and providing direct links to view symposia articles for some m_FinalR.pyears (founddf. by following the respective year’s link to its corresponding webpage).5 The Coase Theorem is named after the late Ronald Coase. Ronald H. Coase,Additionally, The Problem LatCrit of Socialhas developed Cost, 3 aJ.L. substantial&ECON .body1, 1 –of44 scholarship (1960). George from severalStigler, otherhowever, stand was-alone the symposia:economist interwho aliafirst thepresented South- Norththe idea Exchange, now known the asStudy the SpaceCoase Series,Theorem. the GInternationalEORGE J. S TIGLERand Comparative, THE THEORY Colloquia. OF PRICE LatCrit 113 (MacMillan,Symposia, L3dAT Ced.RIT :1966). LATC GeorgeRIT: LATINA Stigler & statedLATINO Coase’s CRITICAL idea LasEGAL a “theorem” THEORY, andINC. ,coined http://latcrit.org/content/publications/latcrit the term “Coase Theorem.” Id. -symposium/ (last visited July6 5,See 2014). generally WILLIAM POUNDSTONE, PRISONER’S DILEMMA (Anchor Books6 These 1993) include(providing Profe an ssorsoverview Marc and-Tizoc history González, of the originsAndrea of Freeman, the dilemma); and Césarsee also Cuahtémoc F. E. Guerra García-Pujol, Hernández. The Parable See ofAbout the Prisoners LatCrit, , supra5–9 (June note 21,3 (listing 2013) the[hereinafter professors Guerra on the-Pujol, LatCrit The Board Parable of Directorsof the andPrisoners their ] respective(unpublished law schools).manuscript) (on file with author), available at http://papers.ssrn.com/sol37 Campo Sano, LATC/papers.cfm?abstract_id=2281593RIT: LATINA AND LATINO CRITICAL, (explainingLEGAL THEORY the, prisoner’sINC, http://www.latcrit.org/content/campo parable). -sano/ (last visited July 5, 2014). 78 Id. 89 SeeId. infra Part I.B. 1292Vol. 47:4 Prisoner’s47 JO HN Dilemma MARS HALL and L. Coase REV. Theorem1292 Vol.1291 47:4

up defecting? Before proceeding, it is worth noting that few scholars have explored the possible relation between the Coase Theorem and the Prisoner’s Dilemma. One important exception is Wayne Eastman, a professor at Rutgers Business School, who established a formal identity between the Coase Theorem and the Prisoner’s Dilemma. 9 Instead of following Eastman’s approach3 (i.e., relating the Coase Theorem to the Prisoner’s Dilemma), 10 we do the opposite. We relate the Prisoner’s Dilemma to the Coase Theorem by constructing a pure CoaseanI. I NTRODUCTION version of the dilemma. The remainder of this paper is organized as follows: Part II providesBuilding some upon background the main bytheme presenting of this year’sthe standardLatCrit formulationsConference, Resistanceof the Prisoner’s Rising: DilemmaTheorizing in numericaland Building as wellCross as- algebraicSector Movements terms. Next,, 4 this P artpaper III (i.e. presents, our contribution our thought to-experiment: this larger incritical order conversation)to test the true challenges value of onethe ofCoase the Theorem,dominant weparadi considergms ina “pureeconomics Coasean and law:version” the Coase of tTheorem.he Prisoner’s5 Specifically, Dilemma we inpresent which a propertythought- experiment,rights are whatwell- definedwe shall and call transactions the “pure Coasean costs areversion” zero (i.e.of the, the famous prisoners Prisoner’s are allowed Dilemma to openly game. communicate6 In brief, andwhat bargain if the directlyprisoners within eachthis other).game -theoryPart IV parableexplores werethe effectsallowed of (i)to uncertainty,communicate (ii)and exponential bargain with discounting, each other and instead (iii) elasticityof being heldon the in behaviorseparate cells,of the asprisoners in the standardin the Coasean version versionof the dilemma?of the dilemma. Would Partour prisonersV considers strike the a rolemutually of the-beneficial prosecutor and (andcollectively third -parties,optimal generally)Coasean bargain,in the Prisoner’s as the DilemmaCoase Theoremand the overallpredicts? complexity7 Or, asof thepre dicteddilemma. in Lastly,the standard Part VI oneidentifies-shot versionconditions of underthe whichPrisoner’s the Prisoner’sDilemma inDilemma which bargaining refutes the is notCoase allowed, Theorem8 would, while they Part still endVII concludes.

3 A.W. Tucker, A Two-Person Dilemma: The Prisoner’s Dilemma (1950), as II. STANDARD VERSIONS OF THE PRISONER’S DILEMMA reprinted in Philip D. Straffin, Jr., The Mathematics of Tucker: A Sampler, 14 TWO-YEAR C. MATHEMATICS J. 228 (1983). 4 ByLatina way & of Latino background, Critical Legalwe begin Theory, this Inc.paper, 2013 by Biennialpresenting LatCrit the standardConference orProgram “canonical” Schedule formulation (and Related of theEvents) Prisoner’s, (2013), Dilemmaavailable at – byhttp://latcrit.org/media/medialibrary/2013/10/LatCrit2013_Conference_Progra far the most famous story or parable in all of game theory – bothm_FinalR.p in numericaldf. and algebraic form. 11 Readers who are already 5 The Coase Theorem is named after the late Ronald Coase. Ronald H. familiarCoase, The with Problem the ofdetails Social of Cost the, 3Prisoner’s J.L. &E CONDilemma. 1, 1–44 may (1960). skip George this partStigler, and however, proceed was to thePart economist III. who first presented the idea now known as the Coase Theorem. GEORGE J. STIGLER, THE THEORY OF PRICE 113 (MacMillan, 3d ed. 1966). GeorgeA. Numerical Stigler stated Form Coase’s idea as a “theorem” and coined the term “Coase Theorem.” Id. 6 See generally WILLIAM POUNDSTONE, PRISONER’S DILEMMA (Anchor BooksThe 1993) original (providing formulation an overview andof historythe dilemma of the origins is ofattributed the dilemma); to see also F. E. Guerra-Pujol, The Parable of the Prisoners, 5–9 (June 21, 2013) [hereinafter Guerra-Pujol, The Parable of the Prisoners] (unpublished manuscript)9 See Wayne (onEastman, file How Coaseanwith Bargainingauthor), Entailsavailable a Prisoners’ at Dilemmahttp://papers.ssrn.com/sol3, 72 NOTRE DAME/papers.cfm?abstract_id=2281593 L. REV. 89, 95–98 (1964) (establishing, (explaining a formal the identityprisoner’s between parable). the Coase Theorem and the Prisoner’s Dilemma). 107 Id. Id. at 90 n.7. 118 See See infrasources Part cited I.B. supra note 6 and accompanying text. 1292Vol.1168 47:4 Prisoner’s47 JO HN Dilemma MARS HALL and L. Coase REV. Theorem12921168 Vol. 129347:4

Professordifferent fromAlbert its Tucker, predecessors, a mathematician particularly at since Princeton it had University,the benefit whoof two presented years of planning.the parable of the prisoners during a guest lecture at StanfordLike the Universityshift in conference in May scheduling,1950. 12 Specifically, other changes Professor have takenTucker place posed within the followingthe LatCrit hypothetical entity, including scenario concerted in a one efforts-page tomimeograph continue a titledprocess A ofTwo institutionalization.-Person Dilemma Inthat recent he preparedyears, there for hashis guestbeen lecture:a growing focus on how to capitalize on its critical niche, continue cultivating the next generation of critical scholars, and ensureTwo that men, the charged baton withof outsider a joint violationjurisprudence of law, is are passed held along. Internally,separately the byorganization the police. Eachhas isshifted, told that including a gradual changing(1) if ofone the confesses guard andin leadership,the other does so tonot, speak, the former as well will as be a downsizinggiven in a administration.reward of one unitFor andexample, the latter from will 2008 be fined to twothe present, units,the Board of Directors was intentionally downsized, with a growing(2) if bothnumber confess, of Boardeach will seats be finedbeing one occupied unit. by junior law professors.At the6 same time each has reason to believe that Another(3) if neither major confesses development both will is goLatCrit’s clear. 13 acquisition of a physical space for the organization. The property, Campo Sano (SpanishIn addition, for “Camp Professor Healthy,” Tucker or more included literally, the “Camp following Sanity”), “payoff is atable” ten- acre in his parcel mimeo of toland illustrate located hisin Centralparable: Florida. 7 Purchased by LatCrit in 2011, the space is home to The Living Justice Center and the LatCrit Community Campus. 8 The physical facility serves as a means “to level the playing field and give LatCrit activists a fighting chance to be heard.”9 The space is intended

to serve as the hub of their educational, research,14 advocacy and activism to remedy the imbalance and

deficiencies of the current legal system. Having an Although Professor Tucker does not use the terms “Prisoner’s independent physical base has become critical as Dilemma” or “Prisoners’ Dilemma” in his original mimeo, he does universities and law schools increasingly are even less refer to the prisoners’ predicament as “a two-person dilemma” in 15 the title of the mimeo. More importantly, in Tucker’s original telling of his tale, we see all the elements associated with the standardNaming and version Launching of the a Prisoner’sNew Discourse Dilemma: of Critical16 Legal Scholarship, 2 HARV.- TwoLATINO Suspects: L. REV. 1 (1997).I and II are held in separate rooms and thus See also LatCrit Biennial Conferences, LATCRIT: LATINA & LATINO unableCRITICAL to LcommunicateEGAL THEORY, orINC bargain., http://latcrit.org/content/conferences/latcrit with each other; - biennial-Two-conferences/ Choices: (lastconfess visited or July not 5,confess; 2013) (providing a list of the previous conferences,-Interdependent and providing Payoffs: direct linksthe topayoffs view symposassociiaated articles with for someeach yearschoice (found depend by upon following the choicesthe respective made byyear’s both link suspects; to its corresponding webpage).-Payoff Table: a visual presentation of the parable, or stated Additionally, LatCrit has developed a substantial body of scholarship from severalformally, other a reductionstand-alone of symposia: the dilemma inter alia to “normalthe South form.”-North Exchange, the StudyThe Space first Series, published the International account andof Comparativethe Prisoner’s Colloquia. Dilemma, LatCrit Symposiahowever,, LdoesATCRIT not: L ATappearCRIT: L ATINAuntil &several LATINO yearsCRITICAL later LEGAL, when THEORY R., IDuncanNC., http://latcrit.org/content/publications/latcrit Luce and Howard Raiffa’s published-symposium/ their classic(last gamevisited- July 5, 2014). 6 These include Professors Marc-Tizoc González, Andrea Freeman, and César12 CuahtémocSYLVIA NASAR García, AB Hernández.EAUTIFUL SeeMIND About: A BLatCritIOGRAPHY, supra OF JnoteOHN 3F (listingORBES theNASH professors,JR. 118 (1998);on the P OUNDSTONELatCrit Board, supra of noteDirectors 6 at, 117and– 18.their respective law schools).13 See Tucker, supra note 3 (presenting the parable of the prisoner). 147 Tucker,Campo supraSano, noteLATC 3.RIT : LATINA AND LATINO CRITICAL LEGAL THEORY, INC,15 http://www.latcrit.org/content/campoId. -sano/ (last visited July 5, 2014). 168 Id.See id. (presenting all of the essential elements of the standard versions of the9 Id. Prisoner’s Dilemma model). 1294Vol. 47:4 Prisoner’s47 JO HN Dilemma MARS HALL and L. Coase REV. Theorem1294 Vol.1293 129147:4

theory treatise, Games and Decisions: Introduction and Critical Survey: 17

The following interpretation [of a two-person, non-zero- sum game], known as the prisoner’s dilemma, is popular: Two suspects are taken into custody and separated. The district attorney is certain3 that they are guilty of a specific crime, but does not have adequate evidence to convict them at trial. He points out to each prisoner that each has two alternatives:I. INTRODUCTION to confess to the crime the police are sure that they have done, or not to confess. If Buildingthey both upondo not theconfess, main then theme the district of this attorney year’s states LatCrit Conference,he will Resistancebook them Rising: on some Theorizing very minor and Buildingtrumped- upCross - Sectorcharge Movements such as, 4 thispetty paper larceny (i.e. ,and our illegal contribution possession to this of alarger criticalweapon, conversation) and they challenges will both onereceive of the minor dominant punishment; paradigms if in economicsthey bothand law:confess the theyCoase will Theorem. both be5 Specifically, prosecuted, webut present he a thoughtwill-experiment, recommend whatless wethan shall the callmost the severe “pure sentence; Coasean butversion” of theif famousone confesses Prisoner’s and Dilemma the other game. does6 In not,brief, then what the if the prisonersconfessor in wthisill receivegame -theorylenient parabletreatment were for turningallowed to communicatestate’s evidence and bargain whereas with theeach latter other willinstead get of“the being book” held in separateslapped cells, at ashim. in18 the standard version of the dilemma? Would our prisoners strike a mutually-beneficial and collectively-optimal CoaseanIn addition,bargain, Luceas theand CoaseRaiffa expressTheorem thepredicts? payoffs7 ofOr, their as prisoners’predicted inparable the instandard numerical one -formshot (i.e.version, in termsof the of Prisoner’syears in prison)Dilemma in ina whichpayoff bargainingtable, stating is not that allowed, “the 8strategicwould they problem” still end in this particular parable “might reduce to” the following set of payoffs: 3 A.W. Tucker, A Two-Person Dilemma: The Prisoner’s Dilemma (1950), as reprinted in Philip D. Straffin, Jr., The Mathematics of Tucker: A Sampler, 14 TWO-YEAR C. MATHEMATICS J. 228 (1983). 4 Latina & Latino Critical Legal Theory, Inc., 2013 Biennial LatCrit Conference Program Schedule (and Related Events), (2013), available at http://latcrit.org/media/medialibrary/2013/10/LatCrit2013_Conference_Progra m_FinalR.pdf. 5 The Coase Theorem is named after the late Ronald Coase. Ronald H. Coase, The Problem of Social Cost, 3 J.L. &ECON. 1, 1–44 (1960). George Stigler, however, was the economist who first presented the idea now known19 as the Coase Theorem. GEORGE J. STIGLER, THE THEORY OF PRICE 113 (MacMillan, 3d ed. 1966). George Stigler stated Coase’s idea as a “theorem” and coinedIt is theworth term noting“Coase Theorem.”that Luce Id. and Raiffa specifically included Professor6 See generallyTucker’s W strategicILLIAM POUNDSTONE game and, P RISONERtheir own’S D ILEMMAcorresponding(Anchor payoffBooks 1993)matrix (providing in the an overviewchapter anddevoted history to of the“Two origins-Person of the Non dilemma);-Zero- see also F. E. Guerra-Pujol, The Parable of the Prisoners, 5–9 (June 21, 2013) [hereinafter Guerra-Pujol, The Parable of the Prisoners] (unpublished manuscript) (on file with author), available at http://papers.ssrn.com/sol317 R. DUNCAN LUCE/papers.cfm?abstract_id=2281593 & HOWARD RAIFFA, GAMES, (explainingAND DECISIONS the: prisoner’sINTRODUCTION parable). AND CRITICAL SURVEY (Dover Publications 2012) (1957). 187 Id.Id. at 95. 198 SeeId. infra Part I.B. 1294Vol.1168 47:4 Prisoner’s47 JO HN Dilemma MARS HALL and L. Coase REV. Theorem12941168 Vol. 129547:4

Sumdifferent Non from-Cooperative its predecessors, Games.” particularly20 In so doing, since Luceit had andthe benefitRaiffa ofpresent two years the ofPrisoner’s planning. Dilemma parable in order to illustrate a particularLike themodel shift of strategicin conference behavior scheduling, – what gameother theoristschanges haverefer takento as aplace “two within-person, the non LatCrit-zero-sum, entity non, including-cooperative concerted game.” 21efforts This tostandard continue version a process of the of Prisoner’sinstitutionalization. Dilemma Inthus recent encompasses years, there all hasthe beenelements a growing essential focus to on such how twoto capitalize-person, onnon its-ze criticalro-sum, niche, non- continuecooperative cultivating games: the next generation of critical scholars, and ensure-First that and the foremost, baton of theoutsider Prisoner’s jurisprudence Dilemma is apassed simple along. two- Internally,person model the or organizationgame; there hasare onlyshifted, two prisoners.including Thisa gradual is an changingimportant ofsimplifying the guard assumption, in leadership, since so there to speak,could justas wellas well as bea downsizingthree, four, inor nadministration. number of suspects. For example, By reducing from the2008 number to the of present,players inthe thisBoard parable of Dire toctors just was two intentionally suspects, itdownsized, simplifies withthe aunderlying growing strategicnumber ofsituation. Board seats being occupied by junior law professors.-Second,6 the Prisoner’s Dilemma is a non-zero-sum game insofarAnother as both major suspects development can receive islight LatCrit’s sentences acquisition if both are ofable a physicalto remain space silent for instead the organization. of snitching. The In property,a zero-sum Campo game, Sano by (Spanishcontrast, forthe “Campgain of Heal one thy,”player or always more literally,comes at “Campthe expense Sanity”), of the is aother ten -acreplayer. parcel Moreover, of land locatedin a nonin Central-zero-sum Florida. game,7 Purchasedsuch as theby LatCritPrisoner’s in Dilemma,2011, the aspace “win is-win” home outcome to The isLiving possible, Justice but Centeronly if andboth theplayers LatCrit agree Community to cooperate Campus. with each8 The other. physical facility serves as a -Next,means the“to levelprisoners the playing in this field storyand giveare LatCrit playing activists a non a- fightingcooperative chance game. to beThe heard.” prisoners9 The spaceare incommunicado is intended insofar as they are held in separate cells to prevent them from bargaining with eachto serve other. as Strictlythe hub speaking, of their a noneducational,-cooperative research, game rules out theadvocacy possibility and activismof mutually to remedybeneficial the Coaseanimbalance bargaining and amongdeficiencies the players. of (Forthe ourcurrent part, welegal shall system. later modify Having this an aspect of theindependent Prisoner’s Dilemmaphysical whenbase wehas presentbecome our critical pure Coaseanas versionuniversities of the dile mmaand law in part schools two.) increasingly are even less -Last, but not least, the Prisoner’s Dilemma is a one-shot game: the prisoners have only one opportunity to play the game. Although this requirement is not stated explicitly in Luce and Naming and Launching a New Discourse of Critical Legal Scholarship, 2 HRaiffa’sARV. LATINO interpretation L. REV. 1 (1997). of the parable, subsequent research has shownSee thatalso LatCritcooperation Biennial is theoretically Conferences, possibleLATCRIT : whenLATINA the & game LATINO is CplayedRITICAL many LEGAL times THEORY (iteration), INC., http://latcrit.org/content/conferences/latcritand when the occurrence of the last- biennialround is-conferences/ uncertain. (last22 visited July 5, 2013) (providing a list of the previous conferences, and providing direct links to view symposia articles for some years (found by following the respective year’s link to its corresponding webpage). 20Additionally, Id. at 94–97. LatCrit has developed a substantial body of scholarship from several21 See other generally stand-,alone John symposia: F. Nash, interNon -aliaCooperative the South Games-North, 54Exchange, ANNALS theOF MStudyATHEMATICS Space Series,286 (1951). the LucInternationale and Raiffa, and however, Comparative were Colloquia.one of the LatCritfirst to Symposiaexpress this, L ATparticularCRIT: L ATtypeCRIT of: LgameATINA in & the L ATINOform ofC RITICALthe Prisoner’s LEGAL Dilemma.THEORY, ILNCUCE., &http://latcrit.org/content/publications/latcrit RAIFFA, supra note 17. As a further aside,-symposium/ John von (lastNeuman visited and OskarJuly 5, Morgenstern2014). also presented non-zero-sum games in their foundational game6 Thesetheory includetreatise, Profe but thessors focus Marc of- Tizoctheir workGonzález, is on Andreacooperative Freeman, games (i.e.and Césargames Cuahtémocin which bargainingGarcía Hernández. among Seethe Aboutplayers LatCrit is allowed),, supra notenot 3on (listing non- thecooperative professors games, on thesuch LatCrit as the BoardPrisoner’s of Directors Dilemma. and JOHN their VON respective NEUMANN law & schools).OSKAR M ORGENSTERN, THEORY OF GAMES AND ECONOMIC BEHAVIOR 504–86 (Princeton7 Campo Univ. Sano Press,, LAT 3dC RITed.: 1953).LATINA AND LATINO CRITICAL LEGAL THEORY, INC,22 http://www.latcrit.org/content/campo See generally ROBERT AXELROD, T-sano/HE E VOLUTION (last visited OF July COOPERATION 5, 2014). 11 (Basic8 Id. Books rev. ed. 2006) (1984) (exploring various resolutions to the Prisoner’s9 Id. Dilemma when one player in this two-person game plays the game 1296Vol. 47:4 Prisoner’s47 JO HN Dilemma MARS HALL and L. Coase REV. Theorem1296 Vol.1295 129147:4

In addition, Luce and Raiffa attribute this standard interpretation of the Prisoner’s Dilemma to A.W. Tucker and also note that this example “has received considerable attention by game theorists.” 23 That this particular parable was already “popular” by the mid-1950s – and sufficiently well-known among mathematicians to be included in Luce and Raiffa’s treatise on game theory – is itself telling. But3 why did this parable become so popular so quickly? One possible reason is the realism of the Prisoner’s Dilemma. Simply put, Luce andI. IRaiffa’sNTRODUCTION version of this parable seems to capture the legal system “in action,” or, more specifically, how the criminalBuilding justice upon system the actuallymain themeoperates of whenthis theyear’s prosecution LatCrit doesConference, not have Resistance sufficient Rising:evidence Theorizingto go to trial, and much Building less convictCross- anSector individual. Movements24 Briefly,, 4 this when paper he (i.e. is, stymiedour contribution by a lack to of this evidence, larger thecritical prosecut conversation)or must challenges adjust onehis ofstrategy, the dominant for paradiwithoutgms the in cooperationeconomics and of atlaw: least the one Coase of theTheorem. prisoners,5 Specifically, he will only we bepresent able toa securethought a- experiment,conviction onwhat some we “minor shall calltrumped the “pure-up charge” Coasean (to version” borrow ofLuce the andfamous Raiffa’s Prisoner’s phrasing). Dilemma And game.thus 6it Inshould brief, comewhat asif theno prisonerssurprise thatin thethis tacticsgame -theoryof offering parable “lenient were treatment” allowed forto ccooperationommunicate (i.e. and, bargaingetting witha suspect each other to instead“flip” or of beingturn heldState’s in separateevidence) cells,and asof infiling the standard“trumped version-up charges” of the dilemma?(what criminal Would ourdefense prisoners attorneys strike refera mutually to as-beneficial “overcharging”) and collectively are common-optimal Coaseanstrategies bargain,used by prosecutors.as the Coase25 Theorem predicts? 7 Or, as predicted in the standard one-shot version of the Prisoner’s Dilemma in whichB. bargainingAlgebraic is or not Logical allowed, Form8 would they still end

Thus far, we have presented the standard Prisoner’s Dilemma 3 in numericalA.W. Tucker, form, A Two but-Person the Dilemma: payoffs Thein Prisoner’sthis model Dilemma can (1950),also beas reprinted in Philip D. Straffin, Jr., The Mathematics of Tucker: A Sampler, 14 presentedTWO-YEAR C.inM ATHEMATICSalgebraic or J. logical228 (1983). form. Consider, for example, the following4 Latina payoff & Latino table, Critical which Legal presents Theory, the Inc. Prisoner’s, 2013 Biennial Dilemma LatCrit in bothConference numerical Program and Schedulealgebraic (and form: Related Events), (2013), available at http://latcrit.org/media/medialibrary/2013/10/LatCrit2013_Conference_Progra m_FinalR.pdf. 5 The Coase Theorem is named after the late Ronald Coase. Ronald H. Coase, The Problem of Social Cost, 3 J.L. &ECON. 1, 1–44 (1960). George Stigler, however, was the economist who first presented the idea now known as the Coase Theorem. GEORGE J. STIGLER, THE THEORY OF PRICE 113 (MacMillan, 3d ed. 1966). George Stigler stated Coase’s idea as a “theorem” and coined the term “Coase Theorem.” Id. 6 See generally WILLIAM POUNDSTONE, PRISONER’S DILEMMA (Anchor Bookswith many 1993) iterations (providing – an“with overview an indefinite and history number of theof interactions, origins of the cooperation dilemma); seecan alsoemerge”); F. E. Guerrasee also- Pujol,Robert The Axelrod Parable & ofWilliam the Prisoners D. Hamilton,, 5–9 (June The Evolution 21, 2013) [hereinafterof Cooperation Guerra, 241 S-Pujol,CIENCE The1390, Parable1391–92 of(1981) the (presentingPrisoners] a (unpublishedmodel based manuscript)on the concept of(on an evolutionarilyfile with stable strategyauthor), in theavailable context of theat http://papers.ssrn.com/sol3Prisoner's Dilemma game)./papers.cfm?abstract_id=2281593 , (explaining the prisoner’s23 LUCE parable). & RAIFFA , supra note 17, at 94. 247 Id. Id. at 94–97. 258 See Id. infraat 95. Part I.B. 1296Vol.1168 47:4 Prisoner’s47 JO HN Dilemma MARS HALL and L. Coase REV. Theorem12961168 Vol. 129747:4 different from its predecessors, particularly since it had the benefit of two years of planning. Like the shift in conference scheduling, other changes have taken place within the LatCrit entity, including concerted efforts to continue a process of institutionalization. In recent years, there has been a growing focus on how to capitalize on its critical niche, continue cultivating the next generation of critical scholars, and ensure that the baton of outsider jurisprudence is passed along. Internally, the organization has shifted, including a gradual changing of the guard in leadership, so to speak, as well as a downsizing in administration. For example, from 2008 to the present, the Board of Directors was intentionally downsized, with a growing number of Board seats being occupied by junior26 law professors. 6 AnotherHere, we majorshall focusdevelopment on the descriptive is LatCrit’s labels acquisitionC and D and of the a physicalalgebraic spacelabels forR, theS, Torganization., and P. First, The theproperty, players’ Campo choices Sano or (Spanish“strategy forsets” “Camp of the Heal playersthy,” orin morethis matrixliterally, now “Camp appear Sanity”), in more is ageneral ten-acre terms: parcel “cooperation” of land located (“C ”)in and Central “defection” Florida. (“7D Purchased”) correspond by toLatCrit “confess” in 2011, and the“not space confess,” is home respectively, to The Living in theJustice traditional Center versionand the ofLatCrit the Prisoner’s Community Dilemma. Campus.27 Likewise,8 The physical the payoffs facility are serves now asdesignated a means in“to lgeneralevel the playingterms. fieldFor andexample, give LatCrit “Reward” activists (“R ”)a fightingrepresents chance the payoffto be heard.”for mutual9 The spacecooperation, is intended “Punishment” (“P”) represents the payoff for mutual defection, and “Temptation payoff”to (“Tserve”) and as “Sucker’sthe hub payoff”of their (“S ”)educational, represent theresearch, remaining two payoffs.advocacy28 and activism to remedy the imbalance and Stateddeficiencies formally of (i.e.the, incurrent general legal algebraic system. terms Having as opposed an to specificindependent numerical values),physical a basegame ishas a Prisoner’sbecome criticalDilemma as when the valuesuniversities of theand payoffslaw schools are increasinglyranked in areordinal even lessfashion: T>R>P>S. 29 Moreover, regardless of whether the Prisoner’s Dilemma is presented in numerical or algebraic form, the outcome

Namingand logic and of Launching this game a Newremain Discourse the same:of Critical defection Legal Scholarshipis always , a2 30 HdominantARV. LATINO strategy, L. REV. 1 (1997).or “Nash equilibrium,” in the one-shot versionSee also of the LatCrit game . Biennial Conferences, LATCRIT: LATINA & LATINO CRITICALIf theLEGAL other THEORY player, I NCcooperates,., http://latcrit.org/content/conferences/latcrit there is a choice between- cooperationbiennial-conferences/ which (lastyields visited R (theJuly 5,reward 2013) (providingfor mutual a list cooperation) of the previous or conferences, and providing direct links to view symposia articles for some defectionyears (found which by followingyields T the(the respective temptation year’s to defect).link to Byits correspondingassumption, Twebpage). > R, so that it pays to defect if the other cooperates. On the other hand,Additionally, if the LatCritother hasplayer developed defects, a substantial there isbody a ofchoice scholarship between from cooperationseveral other whichstand-alone yields symposia: S (the inter sucker’s alia the payoff) South -orNorth defection Exchange, which the Study Space Series, the International and Comparative Colloquia. LatCrit Symposia, LATCRIT: LATCRIT: LATINA & LATINO CRITICAL LEGAL THEORY, INC.26, Axelrodhttp://latcrit.org/content/publications/latcrit & Hamilton, supra note 22, at 1392.- symposium/ (last visited July27 5,Id. 2014). at 1391 –92. 286 TheseId. For include our part, Profe wessors shall Marc follow-Tizoc this González,convention Andrea and thus Freeman, continue and to referCésar toCuahtémoc the payoffs García in the Hernández. Prisoner’s DilemmaSee About using LatCrit these, supra standard note 3labels (listing in thesethe professors algebraic oron general the LatCrit terms. Board of Directors and their respective law schools).29 See Axelrod & Hamilton, supra note 22, at 1392, Figure 1 (identifying that7 theCampo “payoff Sano to , PlayerLATC RITA :is LshownATINA withAND illustrativeLATINO CRITICAL numerical LEGAL values[, THEORY and], [t]heINC, http://www.latcrit.org/content/campogame is defined by T>R>P>S and R>(S+T)/2-sano/ (last”). visited July 5, 2014). 308 Id.See, e.g., SYLVIA NASAR,ABEAUTIFUL MIND:ABIOGRAPHY OF JOHN FORBES9 Id. NASH,JR. 15, 20 (1998). 1298Vol. 47:4 Prisoner’s47 JO HN Dilemma MARS HALL and L. Coase REV. Theorem1298 Vol.1297 129147:4

yields P (the punishment for mutual defection). By assumption P > S, so it pays to defect if the other player defects. Thus, no matter what the other player does, it pays to defect. But, if both defect, both get P rather than the larger value of R that both could have gotten had both cooperated. Hence, the dilemma. With two individuals destined to never meet again, the only strategy that can be called a solution3 to the game is to defect always despite the seeming paradoxical outcome that both do worse than they could have had they cooperated. 31 Therefore, whetherI. theI NTRODUCTIONparable is presented in numerical or algebraic form, the central lesson of the standard one-shot version of theBuilding Prisoner’s upon Dilemma the mainis that themedefection of or this“snitching” year’s is LatCritalways Conference,the Nash equilibrium Resistance ofRising: the game. Theorizing Moreover, and from Building an individual Cross- Sectorperspective, Movements both ,prisoners4 this paper are (i.e. always, our contributionbetter off byto thisdefecting, larger regardlesscritical conversation) of the other challenges prisoner’s one actions. of the For dominant example, paradi if thegms other in prisonereconomics (“Player and law: B”) the snitches, Coase Theorem. Player A5 Specifically,might as w weell presentsnitch toa avoidthought S-,experiment, the sucker’s what payoff. we shallIn fact, call eventhe “pure if the Coasean other prisonerversion” keepsof the quiet,famous Player Prisoner’s A is still Dilemma better offgame. snitching6 In brief, insofar what as Tif, the prisonerstemptation payoff,in this is alwaysgame -greatertheory thanparable R. were allowed to communicateBut what and if the bargain prisoners with are each not other held insteadin separate of being rooms held (i.e in., separatethey are cells,not incommunicado as in the standard)? What version if the ofprisoners the dilemma? could actually Would ourbargain prisoners with eachstrike other a mutually and had-beneficial the ability and to collectively make enforceable-optimal Coaseanpromises andbargain, credible as threats?the Coase Would Theorem they still predicts? defect?7 WeOr, shall as preconsiderdicted thesein thequestions standard next oneby -presentingshot version a “Coasean of the version”Prisoner’s of Dilemmathe Prisoner’s in which Dilemma, bargaining one in is which not allowed, the prisoners8 would arethey allowed still end to communicate and bargain with each other.

3 A.W. Tucker, A Two-Person Dilemma: The Prisoner’s Dilemma (1950), as III. COASEAN VERSION OF THE DILEMMA (WITH STRATEGIC AND NON- reprinted in Philip D. Straffin, Jr., The Mathematics of Tucker: A Sampler, 14 TWO-YEAR C. MATHEMATICSS TRATEGICJ. 228 (1983). BARGAINING) 4 Latina & Latino Critical Legal Theory, Inc., 2013 Biennial LatCrit ConferenceThe previousProgram Schedulesection discussed(and Related the Events)standard, (2013), version available of the at http://latcrit.org/media/medialibrary/2013/10/LatCrit2013_Conference_PrograPrisoner’s Dilemma, in which both players are separated with no m_FinalR.pmeans to dfcommunicate. with each other. This section, however, 5 The Coase Theorem is named after the late Ronald Coase. Ronald H. Coase,removes The the Problem element of Socialof separation Cost, 3 J.L. and&E presentsCON. 1, 1a– 44theoretical (1960). George test ofStigler, the however,Coase Theoremwas the economist through who a firstnovel presented thought the-experiment idea now known – a pureas the Coasean Coase Theorem. version GofEORGE the J.Prisoner’s STIGLER, Dilemma,THE THEORY one OF inPRICE which 113 bargaining(MacMillan, 3dand ed. communication1966). George Stigler are allowedstated Coase’s between idea theas aprisoners. “theorem” First,and coined we thecompare term “Coase the standardTheorem.” versionId. of the Prisoner’s Dilemma 6 See generally WILLIAM POUNDSTONE, PRISONER’S DILEMMA (Anchor withBooks the1993) Coase (providing Theorem, an overview identifying and history the of mainthe origins conditions of the dilemma); of the theorem:see also F. E.(i) Guerrathe existence-Pujol, The ofParable a “reciprocal” of the Prisoners conflict, 5–9 (Junebetween 21, 2013)two parties[hereinafter; (ii) Guerrawell-defined-Pujol, propertyThe Parable rights of; theand Prisoners(iii) zero] transaction(unpublished costs.manuscript) Next, we(on explain file how withour pureauthor), Coasean versionavailable of theat http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2281593, (explaining the prisoner’s parable). 7 Id. 318 See Axelrod infra &Part Hamilton, I.B. supra note 22, at 1391. 1298Vol.1168 47:4 Prisoner’s47 JO HN Dilemma MARS HALL and L. Coase REV. Theorem12981168 Vol. 129947:4

Prisoner’sdifferent from Dilemma its predecessors, satisfies particularly these conditions,since it had specificallythe benefit consideof two yearsring theof planning. application of strategic as well as non-strategic bargainingLike the in shiftthe Coasean in conference or zero scheduling, transaction othercost versionchanges ofhave the takendilemma. place within the LatCrit entity, including concerted efforts to continue a process of institutionalization. In recent years, there has A.beenA aTale growing of Two focus Parables: on how Parable to capitalize of the Rancheron its critical and the niche, continue cultivatingFarmer the andnext Parable generation of the of Prisoners critical scholars, and ensure that the baton of outsider jurisprudence is passed along. Internally,Broadly thespeaking, organization two ofhas theshifted, most includingimportant a ideasgradual in changingeconomics ofand the lawguard are inthe leadership, Coase Theorem so to speak,and theas wellPrisoner’s as a downsizingDilemma, andin eachadministration. has generated For a example,vast technical from literature2008 to –the a present,scholarly thesea Board of Borgesian of Directors proportions. was intentionally32 And yet, downsized, each of thesewith aprofoundly growing influentialnumber of contributionsBoard seats isbeing based occupied on a simpleby junior parable: law professors.Ronald Coase’s6 “Parable of the Rancher and the Farmer” 33 and the gameAnother-theoretic major“Parable development of the Prisoners.” is LatCrit’s34 In summary,acquisition Coase’s of a physicalparable concernsspace for two the pastoral organization. neighbors, The aproperty, cattle rancher Campo andSano a (Spanishcrop farmer, for 35“Camp while Heal Tucker’sthy,” ortale more involves literally, two “Campcriminal Sanity”), suspects is apprehendeda ten-acre parcel by theof landpolice. located36 Although in Central these Florida. memorable7 Purchased parables by evokeLatCrit wildly in 2011, different the spaceand divergent is home worldsto The (i.e. Living, a bucolic Justice world Center of neighboringand the LatCrit farms Community and ranches Campus. on the8 oneThe hand physical versus facility a film serves noir worldas a meansof cops “to andlevel robbersthe playing on fieldthe andother), give fromLatCrit an activistseconomic a perspective,fighting chance these to besimple heard.” stories9 The space share is intendedan essential facet in common. In brief, both parables depict rational actors whose intereststo servecollide. as In thethe hubone case,of their the conflicteducational, arises research, out of cattle trespassadvocacy (i.e., theand rancher’s activism cattle to remedytrampled the the imbalance farmer’s crops);and in the other,deficiencies each prisoner of the mustcurrent decide legal whether system. to betrayHaving or anremain loyal toindependent the other. 37 physical base has become critical as Nevertheless,universities andalthough law schoolsboth parables increasingly portray are rational even less parties with opposing or conflicting interests, these stories diverge in one

Naming and Launching a New Discourse of Critical Legal Scholarship, 2 HARV32 .At LATINO last count L. R EV(July. 1 (1997).25, 2014), for example, an electronic search for the termSee “Coase also theorem” LatCrit generatesBiennial 25,200Conferences results., GLOOGLEATCRIT :S CHOLARLATINA, & LATINO http://scholar.google.com/scholar?q=%22coase+theorem%22&btnG=&hl=en&asCRITICAL LEGAL THEORY, INC., http://latcrit.org/content/conferences/latcrit- _sdt=0%2C14biennial-conferences/ (last visited (last Julyvisited 25, July 2014). 5, 2013) A search (providing for the aterm list of“prisoner’s the previous dilemma,”conferences, however, and providing produces directmore thanlinks four to timesview symposas manyia resultsarticles (107,000). for some Id.years at (found by following the respective year’s link to its corresponding webpage).http://scholar.google.com/scholar?q=%22prisoner%27s+dilemma%22&btnG=& hl=en&as_sdt=0%2C14Additionally, LatCrit (last has visiteddeveloped July a 24,substantial 2014). body of scholarship from several33 See other Coase, stand supra-alone note symposia: 5, at 2– 15inter (presenting alia the Souththe “Parable-North ofExchange, the Rancher the andStudy the Space Farmer”). Series, See thealso InternationalF. E. Guerra -Pujol,and Comparative Modelling the Colloquia. Coase Theorem LatCrit, 5 SymposiaEUR. J. LEGAL, LAT SCTUDRIT:. 139,LAT C141RIT–: 42L ATINA(2012) &[hereinafter LATINO C GuerraRITICAL- Pujol,LEGAL Modelling THEORY], I(combiningNC., http://latcrit.org/content/publications/latcrit Coase’s intuitive insights with the formal-symposium/ methods of game(last theory);visited RobertJuly 5, 2014).Ellickson, Of Coase and Cattle: Dispute Resolution Among Neighbors in Shasta6 These County include, 38 S TANProfe. L.ssors REV Marc. 623,- Tizoc624– 25González, (1986) (reporting Andrea Freeman,the results and of Césaran attempt Cuahtémoc to explore García the Hernández. realism of See the About “Parable LatCrit of the, supra Rancher note 3and (listing the theFarmer”). professors on the LatCrit Board of Directors and their respective law schools).34 LUCE & RAIFFA, supra note 17; Guerra-Pujol, The Parable of the Prisoners7 Campo, supra Sano note, L 6;AT Tucker,CRIT: L ATINAsupra noteAND 3.L ATINO CRITICAL LEGAL THEORY, INC,35 http://www.latcrit.org/content/campo Coase, supra note 5, at 2–15. -sano/ (last visited July 5, 2014). 368 Id. Tucker, supra note 3. 379 Id. Id. ; Coase, supra note 5, at 2–15. 1300Vol. 47:4 Prisoner’s47 JO HN Dilemma MARS HALL and L. Coase REV. Theorem1300 Vol.1299 129147:4

important respect: the ability, or lack thereof, of the parties to settle their differences through bilateral negotiations or Coasean bargaining. That is, the most salient distinction between the hypothetical worlds of the Coase Theorem and the Prisoner’s Dilemma is the ability to bargain. In the former case, the rancher and the farmer are fully able to bargain with each other and negotiate a mutually beneficial 3enforceable agreement. 38 In the latter story, however, the prisoners have no such option; they are held in separate cells and unable to talk, much less bargain with one another. 39 This ability,I. IorNTRODUCTION inability, of the parties to deal with each other is of critical importance, at least in the traditional tellingBuilding of each upontale. Inthe the main one case,theme a Coaseanof this bargainyear’s betweeLatCritn Conference,the rancher Resistanceand the Rising:farmer Theorizingproduces anand optimal Building result Cross or- SectorPanglossian Movements outcome, 4 this (i.e. paper, an (i.e.efficient, our contribution allocation toof thisresources larger devotedcritical conversation)to the production challenges of crops one and of themeat). dominant40 In the paradi othergms case, in theeconomics parties’ and inability law: the to bargainCoase Theorem. with each5 Specifically, other inevitably we present leads toa mutualthought -betrayalexperiment, and whata worse we outcomeshall call (longer the “pure prison Coasean sentences) version” for bothof the prisoners. famous 41Prisoner’s Dilemma game. 6 In brief, what if the prisonersSuffice init tothis say, gamehowever,-theory few parablescholars werehave exploredallowed theto crelationommunicate between and thesebargain two with important each other models. instead One of beingexception held inis separateWayne Eastman,cells, as ina theprofessor standard at versionRutgers ofBusiness the dilemma? School, Would who ouridentified prisoners the strikeconditions a mutually under-beneficial which andCoasean collectively bargaining-optimal Coaseanconstitutes bargain, a Prisoner’s as Dilemma.the Coase42 Specifically,Theorem predicts? he models7 Or,Coase’s as prerancherdicted-farmer in the parable standard as a Prisoner’sone-shot Dilemmaversion ofand the establishes Prisoner’s a formalDilemma identity in which between bargaining the Coaseis not Theoremallowed, 8 wouldand the they Prisone still endr’s Dilemma. 43 Our approach in this paper, however, is different than Eastman’s. Instead of relating the Coase Theorem to the Prisoner’s 3 Dilemma,A.W. Tucker, as Eastman A Two- Persondoes, Dilemma:we do theThe opposite.Prisoner’s 44Dilemma We relate (1950), the as reprinted in Philip D. Straffin, Jr., The Mathematics of Tucker: A Sampler, 14 Prisoner’sTWO-YEAR C. DilemmaMATHEMATICS to J.the228 (1983).Coase Theorem by constructing a Coasean4 Latina version & Latino of Criticalthe dilemma.Legal Theory,45 Specifically, Inc., 2013 Biennialwe pose LatCrit the followingConference questions:Program Schedule what if (andthe prisonersRelated Events) were,, in(2013), fact, availableallowed toat communicatehttp://latcrit.org/media/medialibrary/2013/10/LatCrit2013_Conference_Progra and bargain with each other in Coasean fashion? Thatm_FinalR.p is, dfwhat. if our hapless prisoners were able to negotiate a 5 The Coase Theorem is named after the late Ronald Coase. Ronald H. mutuaCoase, Thelly Problembeneficial of Socialand Costlegally, 3 J.L.enforceable&ECON. 1,agreement? 1–44 (1960). GeorgeWould Stigler, however, was the economist who first presented the idea now known as the Coase Theorem. GEORGE J. STIGLER, THE THEORY OF PRICE 113 (MacMillan,38Coase, supra3d ed. note 1966). 5, atGeorge 2–15. Stigler stated Coase’s idea as a “theorem” and 39coined LUCE the& R termAIFFA “Coase, supra Theorem.” note 17; Tucker, Id. supra note 3. 406 Coase,See generally supra note W ILLIAM5, at 2– 15.POUNDSTONE , PRISONER’S DILEMMA (Anchor Books41 Tucker, 1993) (providing supra note an 3. overview and history of the origins of the dilemma); see 42also Eastman, F. E. Guerra supra -notePujol, 9. The Parable of the Prisoners, 5–9 (June 21, 2013) [hereinafter43 Id. Guerra-Pujol, The Parable of the Prisoners] (unpublished manuscript)44 See id. at 90(on n.7 (notingfile verywith deliberately author), that his propositionavailable “relatesat thehttp://papers.ssrn.com/sol3 [Coase] Theorem to the/papers.cfm?abstract_id=2281593 [Prisoner’s] Dilemma, rather ,than (explaining vice versa” andthe hisprisoner’s reasons parable). for electing to do so). 457 Id. See Guerra-Pujol, Modelling, supra note 35 (providing a different game- theoretic8 See infraformulation Part I.B. of the Coase Theorem). 1300Vol.1168 47:4 Prisoner’s47 JO HN Dilemma MARS HALL and L. Coase REV. Theorem13001168 Vol. 130147:4

theydifferent still from defect its orpredecessors, would they particularly somehow sincedecide it tohad cooperate the benefit as postulatedof two years by of the planning. Coase Theorem? Like the shift in conference scheduling, other changes have taken placeB. withinThe Three the ConditionsLatCrit entity of the, including Coase Theorem concerted efforts to continue a process of institutionalization. In recent years, there has beenBefore a growingattempting focus to onanswer how to the capitalize above onquestions, its critical we niche,shall continuefirst identify cultivating and reviewthe next the generation main conditions of critical ofscholars, the Coase and ensureTheorem. that Professor the bato nCoase of outsider introduced jurisprudence the counterintuitive is passed along. idea Internally,now known theas theorganization “Coase Theorem” has shifted, with aincluding memorable a gradualparable changingabout cattle of trespass.the guard46 inThe leadership, rancher-farmer so to speak,parable, as however, well as isa downsizingreally a stor iny aboutadministration. joint interactions For example, involving from bargaining 2008 to andthe present,property therights. Board That of Direis, ctorsCoase was posed intentionally a well-defined downsized, reciprocal with aproblem growing using number the exampleof Board of seats cattle being trespass occupied and thenby junior imagi nedlaw professors.what would6 happen if the affected parties (i.e., the rancher and the farmer)Another could majorsolve thisdevelopment problem throughis LatCrit’s voluntary acquisition bargaining. of 47a physical(Ultimately, space this for is the the organization. same question The that property, we pose Campo about Sano the (Spanishprisoners forin the“Camp Prisoner’s Healthy,” Dilemma.) or more Coaseliterally, observed “Camp that Sanity”), when (i)is athe ten costs-acre parcelof transacting of land located are zeroin Central (a standard Florida. 7assumption Purchased byin LatCriteconomics) in 2011,and (ii)the propertyspace is homerights to areThe wellLiving-defined, Justice “Coasean Center andbargaining” the LatCrit (i.e. Community, voluntary Campus. negotiations)8 The physicalamong facilitythe affected serves partiesas a means will produce“to level an the efficient playing economic field and outcome. give LatCrit48 Although activists this a economicfighting chance “theorem” to be hasheard.” been9 Thestated space in ismany intended different ways over the years, 49 the necessary elements of the Coase theorem remain constant:to serve(i) the as existence the hub of aof reciprocaltheir educational, conflict, (ii)research, well-defined propertyadvocacy rights, and and activism (iii) zeroto remedy transactions the imbalance costs (i.e.and, no impedimentsdeficiencies to bargaining). of the current50 Accordingly, legal system. we shall Having now show an how our pureindependent Coasean physicalversion ofbase the hasdilemma become satisfies critical all asthree standarduniversities conditions and of thelaw Coaseschools Theorem. increasingly are even less

1. Reciprocal Nature of the Prisoner’s Dilemma

Naming and Launching a New Discourse of Critical Legal Scholarship, 2 HARV.First LATINO and L. R EVforemost,. 1 (1997). we wish to point out the “reciprocal nature”See also51 of LatCritthe prisoners’ Biennial plightConferences in all, versionsLATCRIT: ofLATINA the Pri& soner’sLATINO Dilemma.CRITICAL L EGALAlthough THEORY this, IaspectNC., http://latcrit.org/content/conferences/latcrit of Coase’s work is often overlooked- orbiennial neglected-conferences/ in the (last law visited and Julyeconomics 5, 2013) (providingliterature, a listwe ofbelieve the previous it is conferences, and providing direct links to view symposia articles for some Coase’syears (found most by originalfollowing andthe counterintuitiverespective year’s linkinsight. to its Consider,corresponding for webpage). Additionally, LatCrit has developed a substantial body of scholarship from several46 Coase, other supra stand note-alone 5, atsymposia: 2–15. inter alia the South-North Exchange, the Study47 Id. Space Series, the International and Comparative Colloquia. LatCrit Symposia48 See ,Coase, LATC RITsupra: L ATnoteCRIT 5,: atL ATINA2–15 (noting& LATINO when C “CoaseanRITICAL Lbargaining”EGAL THEORY will, IproduceNC., http://latcrit.org/content/publications/latcrit an efficient economic outcome). See also -Ronaldsymposium/ H. Coa se,(last The Federalvisited JulyCommunications 5, 2014). Commission, 2 J.L. & ECON. 1, 25–30 (1959) (noting when “Coasean6 These bargaining” include Profe will producessors Marc an -efficientTizoc González, economic Andrea outcome). Freeman, and César49 SeeCuahtémoc STEVEN GarcíaG. MEDEMA Hernández. & RICHARD See About O. Z ERBELatCrit, The, supra Coase note Theorem, 3 (listing 1 theTHE professorsENCYCLOPEDIA on the OFLatCrit LAW Board AND of EDirectorsCONOMICS and: TtheirHE HrespectiveISTORY ANDlaw schools).METHODOLOGY OF LAW AND ECONOMICS 837–38 (Boudewijn Bouckaert & Gerrit7 Campo De Geest Sano eds.,, LAT 2000)CRIT: (providingLATINA AND an LextensiveATINO CRITICAL listing LofEGAL some T HEORYof the, variousINC, http://www.latcrit.org/content/campo statements of the Coase Theorem).-sano/ (last visited July 5, 2014). 508 Id. Coase, supra note 5, at 2–15. 519 Id. Id. at 1–2. 1302Vol. 47:4 Prisoner’s47 JO HN Dilemma MARS HALL and L. Coase REV. Theorem1302 Vol.1301 129147:4

example, Coase’s parable of the rancher and the farmer.52 According to Coase, it is a fallacy to think that the problem of cattle trespass is caused solely by the rancher. 53 In reality, cattle trespass (i.e., the risk of potential harm to the farmer’s crops) is a joint problem. 54 Just as the rancher can reduce the risk of harm by reducing the size of his herd or erecting a boundary fence, so too can the farmer, either by planting3 cattle-resistant crops or by putting up the fence himself. 55 Likewise, the Prisoner’s Dilemma also presents a reciprocal problem insofar as the payoffs for both prisoners stem from theirI. independentlyINTRODUCTION made choices to defect or cooperate. 56 Thus, if both prisoners end up defecting in the standardBuilding one -shotupon version the mainof the themegame (asof gamethis year’stheory predictsLatCrit Conference,they will do), Resistance then the prisonersRising: Theorizinghave only themselves and Building to blame Cross for- Sectortheir collective Movements plight., 4 this57 paperIn short, (i.e. ,the our prisoners’contribution plight, to this like larger the problemcritical conversation)of cattle trespass, challenges is the one product of the of dominant a joint interaction: paradigms the in outcomeeconomics in and both law: cases the is Coase not determined Theorem. 5 bySpecifically, the actions we of present just one a party,thought but-experiment, rather by thewhat choices we shall made call by the both “pure of them Coasean jointly. version” of the famous Prisoner’s Dilemma game. 6 In brief, what if the 2.prisonersWell-Defined in Propertythis game Rights-theory parable were allowed to communicate and bargain with each other instead of being held in separateDoes cells,the secondas in thecondition standard of the version Coase ofTheorem the dilemma? (i.e., the Would legal ourassignment prisoners of strikewell-defined a mutually property-beneficial rights toand one collectively of the conflicting-optimal Coaseanparties) applybargain, to theas Prisoner’sthe Coase Dilemma? Theorem If predicts?so, what7 propertyOr, as prerightsdicted are inbeing the tradedstandard in theone standard-shot version version of of thethe Prisoner’s Dilemma?Dilemma in which bargaining is not allowed, 8 would they still end Recall that the Prisoner’s Dilemma is a compelling parable about betrayal and loyalty, a secular morality tale about the 3 conflictA.W. betweenTucker, A Twoindividual-Person Dilemma:and collective The Prisoner’s rationality. Dilemma (1950),Strictly as reprinted in Philip D. Straffin, Jr., The Mathematics of Tucker: A Sampler, 14 speaking,TWO-YEAR C.theM ATHEMATICSPrisoner’s J.Dilemma228 (1983). is not a story about property per se; 4 however,Latina & Latinoproperty Critical rights Legal do Theory,play aInc. secondary, 2013 Biennial role inLatCrit the dilemma.Conference FromProgram a Schedulelibertarian (and or Relatedclassical Events) liberal, (2013), perspective, available the at prisonershttp://latcrit.org/media/medialibrary/2013/10/LatCrit2013_Conference_Progra have a vested property right in their personal liberty, andm_FinalR.p althoughdf. personal liberty is often considered to be an 5 The Coase Theorem is named after the late Ronald Coase. Ronald H. 58 inalienableCoase, The Problem(i.e., non of -negotiable)Social Cost, right,3 J.L. &E whatCON . is1, a1 –plea44 (1960). bargain George but Stigler, however, was the economist who first presented the idea now known as the Coase Theorem. GEORGE J. STIGLER, THE THEORY OF PRICE 113 (MacMillan,52 Id. at 23d–15 ed.. 1966). George Stigler stated Coase’s idea as a “theorem” and 53coined Id. the term “Coase Theorem.” Id. 546 Id.See at generally 1–2. WILLIAM POUNDSTONE, PRISONER’S DILEMMA (Anchor Books55 See1993) F. (providingE. Guerra an-Pujol overview & Orlando and history I. Martinez of the- Garcia,origins ofClones the dilemma); and the Coasesee also Theorem F. E. Guerra, 2 JOURNAL-Pujol, TheOF LParableAW & ofSOCIAL the Prisoners DEVIANCE, 5– 943, (June 65- 7321, (2011)2013) [hereinafter(providing an Guerraextended-Pujol, discussion The Parableof the reciprocalof the Prisonersnature of] the(unpublished rancher- manuscript)farmer parable). (on file with author), available at http://papers.ssrn.com/sol356 Tucker, supra note 3./papers.cfm?abstract_id=2281593 , (explaining the prisoner’s57 Tucker, parable). supra note 3. 587 Id. See, e.g., Margaret Jane Radin, Market Inalienability, 100 HARV. L. REV. 1849,8 See 1903 infra–06 Part(1987) I.B. (discussing the commoditization of negative liberty). Of 1302Vol.1168 47:4 Prisoner’s47 JO HN Dilemma MARS HALL and L. Coase REV. Theorem13021168 Vol. 130347:4

adifferent judicially from sanctioned its predecessors, trade ofparticularly one’s personal since liberty?it had the When benefit a ofcriminal two years suspect of planning. is offered a plea bargain, the prosecutor is, in effect,Like asking the theshift suspect in conference to relinquish scheduling, some of otherhis personal changes liberty have taken(i.e., he place agrees within to a thecertain LatCrit but reducedentity, includingprison sentence concerted – x effortsyears) toin continueexchange a forprocess avoiding of institutionalization. the possibility of In a recentmaximum years, prisonthere hassentence been (e.g.a growing, 5x or 10xfocus yea onrs). how59 to capitalize on its critical niche, continueThis cultivatingbroad definition the next of property generation (i.e. , of“liberty critical as scholars, property”) and is ensureconsistent that with the batotraditionaln of outsider conceptions jurisprudence of property is passedrights. along. The Internally,legal philosopher the organizationStephen Munzer has andshifted, the includinglate political a gradualtheorist changingC.B. Macpherson, of the guardamong in others, leadership, have describedso to speak, in detailas well different as a downsizingconceptions inof administration.property rights; Forin example,particular, from property 2008 into the present,classical theor commonBoard of lawDire ctorssense wasrefers intentionally to everything downsized, (tangible with or aintangible) growing tonumber which ofa Boardperson seatshas abeing right, occupied including by the junior right law to professors.personal liberty.6 60 In the words of Macpherson, “men were said to have Anothera property major not developmentonly in land isand LatCrit’s goods andacquisition in claims of ona revenuesphysical spacefor leases, for themortgages, organization. patents, The monopolies property, and Campo so on, Sano but also(Spanish a propertyfor “Camp in Healtheirthy,” lives or moreand literally,persons.” “Camp61 Although Sanity”), this is aclassical ten-acre conception parcel of landof property located isin circular, Central62 Florida. our larger7 Purchased point here by LatCritis that personalin 2011, libertythe space is an is i ntangiblehome to propertyThe Living right, Justice a right Center that andcan thebe bargainedLatCrit Community away in certain Campus. situations,8 The physical as in thefacility Prisoner’s serves asDilemma. a means “to level the playing field and give LatCrit activists a fighting chance to be heard.”9 The space is intended 3. Zero Transaction Costs, Strategic Behavior, and Non-Strategic Bargainingto serve as the hub of their educational, research, advocacy and activism to remedy the imbalance and Stateddeficiencies in Coasean of the terms, current the ruleslegal insystem. the standard Having version an of the Pindependentrisoner’s Dilemma physical (i.e. ,base no bargaining)has become artificially critical generateas high transactionuniversities costs.and lawBut schoolswhat if increasinglywe change these are evenrules lessto allow bargaining? That is, what if we imagine a Coasean version of the Prisoner’s Dilemma, one with zero transactions costs? Some scholars of the Coase Theorem, however, have already Naming and Launching a New Discourse of Critical Legal Scholarship, 2 HnotedARV. LATINOthat parties,L. REV. 1 (1997).even parties who find themselves in a low See also LatCrit Biennial Conferences, LATCRIT: LATINA & LATINO CRITICAL LEGAL THEORY, INC., http://latcrit.org/content/conferences/latcrit- course,biennial the-conferences/ most famous (last statement visited July of this5, 2013) idea (providingappears in ath liste U.S. of the Declaration previous ofconferences, Independence and of providing July 4, 1776. direct links to view symposia articles for some years59 Note(found that by wefollowing do not meanthe respective to express year’s our normativelink to its approval corresponding of plea bargainswebpage). in criminal cases. We are simply making a descriptive point here aboutAdditionally, the secondary LatCrit role hasof property developed rights a substantial in the Prisoner’s body of Dilemma. scholarship from several60 Seeother C. stand B. -aloneMacpherson, symposia: Theinter Meaningalia the Southof -PropertyNorth Exchange,, PROPERTY the: MStudyAINSTREAM Space ANDSeries, CRITICAL the International CONCEPTIONS and 1, 8 Comparative(C. B. Macpherson, Colloquia. ed., Univ.LatCrit of TorontoSymposia Press, LAT 1978)CRIT: (identifyingLATCRIT: L propertyATINA & asL ATINO“a right C RITICAL– a somewhat LEGAL uncertainTHEORY, IrightNC., thathttp://latcrit.org/content/publications/latcrit has constantly to be re-asserted”); STEPHEN-symposium/ R. MUNZER (last, A THEORYvisited OFJuly P ROPERTY5, 2014). 90 (Cambridge Univ. Press 1990) (identifying “liberty” among a list 6of Theseitems includethat should Profe bessors considered Marc-Tizoc personal González, goods (i.e.Andrea personal Freeman, property) and insofarCésar Cuahtémoc as “they are García often Hernández. valued either See inAbout themselves LatCrit or, supra as means note 3to (listing other thingsthe professors that are onvalued the orLatCrit both”); Board Cheryl of L. Directors Harris, Whiteness and their as respective Property, law106 Hschools).ARV. L.R. 1707, 1724–31 (1993) (providing a general overview of the broad historical7 Campo concept Sano of, property).LATCRIT: LATINA AND LATINO CRITICAL LEGAL THEORY, INC,61 http://www.latcrit.org/content/campo C.B. Macpherson, supra note 64, at- sano/7. (last visited July 5, 2014). 628 Id. This conception of property is circular, since all it is saying, in effect, is that9 oneId. has a right to what one has a right to. 1304Vol. 47:4 Prisoner’s47 JO HN Dilemma MARS HALL and L. Coase REV. Theorem1304 Vol.1303 129147:4

transaction cost setting, may act strategically and thus fail to strike a mutually beneficial Coasean bargain. 63 Here, we shall contribute to the literature on the Coase Theorem in two ways. First, building on the work of Wayne Eastman, we shall consider strategic behavior in the form of promises and threats and explain why such strategic behavior might prevent the formation of Coasean bargains between the 3 prisoners—even when they are allowed to communicate with each other. Next, building on the work of John Nash, we shall consider the possibility of non- strategic bargaining by I.the prisoners.INTRODUCTION

4. StrategicBuilding Bargaining, upon the Threats main andtheme Promises of thisin the year’s Prison er’sLatCrit Conference,Dilemma Resistance Rising: Theorizing and Building Cross- Sector Movements, 4 this paper (i.e., our contribution to this larger criticalOne conversation) of the central challenges lessons of one game of thetheory dominant is that paradione cangms often in –economics but not always,and law: as the we Coaseshall Theorem.soon see –5 Specifically,gain a tactical we advantage present a duringthought -negotiationsexperiment, bywhat commit we shallting calloneself the “pure(or pre Coasean-commit version”ting, so toof speak)the famous to a particularPrisoner’s strategy,Dilemma suchgame. as6 aIn costlybrief, threatwhat ifor thean enforceableprisoners promise.in this64 Thisgame insight-theory is parableoften referred were to asallowed the “first to- movercommunicate advantage,” and bargain65 and withthe abilityeach other to makeinstead one’s of being threats held orin separatepromises cells,believable as in isthe considered standard aversion “credible of thecommitment.” dilemma? 66Would The Coaseanour prisoners version strike of thea mutually Prisoner’s-beneficial Dilemma, and however,collectively poses-optimal an especiallyCoasean bargain,difficult challengeas the toCoase the CoaseTheorem Theorem predicts? because7 Or, there as ispre nodicted-first moverin the advantage standard in onethe- shotPrisoner’s version Dilemma. of the Prisoner’s DilemmaIn summary, in which bargainingthere is isno notfirst allowed,-mover8 wouldadvantage they stillin endthe Coasean version of the Prisoner’s Dilemma due to the possibility of strategic behavior. Assume, for example, that Prisoner 1 decides to 3 A.W. Tucker, A Two-Person Dilemma: The Prisoner’s Dilemma (1950), as reprinted in Philip D. Straffin, Jr., The Mathematics of Tucker: A Sampler, 14 TWO63-Y See,EAR e.g.C. M, HerbertATHEMATICS Hovenkamp, J. 228 (1983). Marginal Utility and the Coase Theorem, 75 C4 ORNELLLatina L.& RLatinoEV. 783, Critical 787–91 Legal(1990) Theory,(arguing Inc.that, the2013 failure Biennial of the LatCrit Coase Conferencetheorem to predictProgram real Schedule world outcomes” (and Related is frequently Events) explained, (2013), by available “the failure at http://latcrit.org/media/medialibrary/2013/10/LatCrit2013_Conference_Prograof the relevant actors” as opposed to “high transaction costs” Id. at 788); m_FinalR.pROBERT D. dfC. OOTER & THOMAS ULEN, LAW AND ECONOMICS 242–44 (Scott Foresman5 The Coase& Co., Theorem 2d ed. 1982); is named and afterRobert the Ellickson, late Ronald “Of CoaseCoase. andRonald Cattle: H. DisputeCoase, TheResolution Problem Among of Social Neighbors Cost, 3in J.L. Shasta&E County,CON. 1, 381– 44STAN (1960).. L. R EVGeorge. 623, Stigler,625 n.4 however,(1986) (proposing was the economistthat “negotiations who first in presented bilateral themonopoly idea now situations known ascan thebe costlyCoase because Theorem. the partiesGEORGE may J. act S TIGLERstrategically”)., THE T HEORY OF PRICE 113 (MacMillan,64 See, 3de.g., ed. A1966).VINASH George K. DStiglerIXIT & stated BARRY Coase’s J. N ideaALEBUFF as a, “theorem”THINKING andSTRATEGICALLY coined the term124 –“Coase26 (W.W. Theorem.” Norton, Id. reprt. ed. 1993) (asserting that strategic6 See moves generally are two WILLIAM-pronged: POUNDSTONE (i) the planned, PRISONER course’ Sof D actionILEMMA and(Anchor (ii) the commitmentBooks 1993) (providingthat makes an this overview course andcredible); history see of also the originsDOUGLAS of BtheAIRD dilemma);, ET AL., seeGAME also T HEORYF. E. GuerraAND THE-Pujol, LAW 43The-44 Parable (1994). of the Prisoners, 5–9 (June 21, 2013) [hereinafter65 Roger A.Guerra Kerin,- Pujol,P. Rajan The Varadarajan Parable &of Robert the PrisonersA. Peterson,] (unpublished First-Mover manuscript)Advantage: A Synthesis,(on Conceptualfile with Framework, author), and Researchavailable Propositions at, http://papers.ssrn.com/sol356 J. MARKETING , Oct., 1992,/papers.cfm?abstract_id=2281593 at 33, 33. , (explaining the prisoner’s66 See, parable).e.g., Douglass C. North, Institutions and Credible Commitment, 149 J. 7INSTId. ’L THEORETICAL ECON 11-12 (Mar. 1993) (identifying that the enforcement8 See infra is Part “central I.B. to credible commitment”). 1304Vol.1168 47:4 Prisoner’s47 JO HN Dilemma MARS HALL and L. Coase REV. Theorem13041168 Vol. 130547:4

predifferent-commit from to its cooperationpredecessors, and particularly is able sinceto communicateit had the benefit his ofcooperative two years commitment of planning. to Prisoner 2, say by taking a sincere and solemnLike oath the in shift Prisoner in conference 2’s presence scheduling, to remain other silent changes “no mat haveter takenwhat.” 67place Also, within assume the LatCritthat Prisoner entity, including2 truly concertedbelieves inefforts the tosincerity continue and a seriousnessprocess of institutionalization. of the other prisoner’s In recentsolemn years, oath. thereThat hasis, he been knows a growing that Prisoner focus on 1 howis a toman capitalize of his word. on its Perversely, critical niche, the continuelogic of defection cultivating continues the next to prevail,generation for defectionof critical or scholars,confessing and is ensurestill Prisoner that the 2’s batodominantn of outsider strategy. jurisprudence In fact, Prisoner is passed 2 has along. an Internally,even stronger the incentive organization to defect has inshifted, this situation including because a gradual he is changingnow certain of theto obtainguard inthe leadership, temptation so payoff,to speak, given as wellthe otheras a downsizingprisoner’s binding in administration. promise not to Fordefect. example, from 2008 to the present,Knowing the Board this, ofwhat Dire ifctors Prisoner was intentionally1 took a different downsized, approach with aand growing made anumber credible of threatBoard insteadseats beingof a mereoccupied promise? by junior That lawis, professors.assume now6 that Prisoner 1 is able to make and communicate a credibleAnother threat major to punish development the other isprisoner LatCrit’s in theacquisition event that of the a physicallatter decides space tofor defect. the organization.Introducing theThe tactical property, use Campoof a credible Sano (Spanishthreat, however, for “Camp dramatically Healthy,” orchanges more literally,the payoffs “Camp of theSanity”), game. 68is aIn ten other-acre words, parcel anof enforceableland located agreement in Central backed Florida. up7 Purchasedby a credible by LatCritthreat changesin 2011, the spacevalues is ofhome the topayoffs The Living of the Justice prisoners. Center69 andTherefore, the LatCrit strictly Community speaking, Campus.under these8 The facts, physical the facilityprisoners serves are noas longera means playing “to l evela Prisoner’s the playing Dilemma. field and give LatCrit activists a fightingStated chance formally, to be heard.” a credible9 The spacethreat is intendedchanges Prisoner 2’s temptation payoff, T; specifically, the value of T decreases as the severityto ofserve the threatas the increases.hub of 70their Bu t,educational, let us put research,this technical objectionadvocacy to one and side activismand consider to remedy the possibility the imbalance of non -strategicand bargainingdeficiencies by the of prisonersthe current in legalthe Coaseansystem. Havingversion anof the dilemma.independent physical base has become critical as universities and law schools increasingly are even less 5. Non-Strategic Coasean Bargaining

Assume that the prisoners can bargain with each other and Naming and Launching a New Discourse of Critical Legal Scholarship, 2 71 HcanARV . makeLATINO credibleL. REV. 1 (1997).threats and binding promises. Without a See also LatCrit Biennial Conferences, LATCRIT: LATINA & LATINO CRITICAL LEGAL THEORY, INC., http://latcrit.org/content/conferences/latcrit- biennial67 For-conferences/ clarity, we (lastshall visitedfollow JulyLuce 5, & 2013) Raiffa’s (providing interpretation a list of of the the previous parable conferences,and continue andto refer providing to Player direct A aslinks “Prisoner to view 1” andsympos Playiaer articlesB as “Prisoner for some 2” yearsin the remainder(found by offollowing this paper. the respective year’s link to its corresponding webpage).68 Cf. Wayne Eastman, Everything is up for Grabs: The Coasean Story in GameAdditionally,-Theoretic LatCritTerms, 31has N developedEW ENG. L.a substantialREV. 1, 1– 37body (1996) of scholarship (discussing from the severalidea of “payoffother standmutability”)-alone symposia: inter alia the South-North Exchange, the Study69 See,Space e.g. ,Series, Elinor theOstram, International et al., Covenants and Comparative with and Colloquia.without a LatCritSword: SelfSymposia-Governance, LATC RITIs : PossibleLATCRIT, :86 L ATINAAMERICAN & L PATINOOLITICAL CRITICAL SCIENCE LEGAL REVIEW THEORY 404,, 413INC.–, 414http://latcrit.org/content/publications/latcrit (1992) (reviewing the “payoff consequences”-symposium/ of selecting (last orvisited not selectionJuly 5, 2014). a sanctioning mechanism in a common-pool resource game). 706 TheseRecall includethat a Prisoner’sProfessors Dilemma Marc-Tizoc occurs González, when the Andrea values Freeman,of the payoffs and Césarare T >Cuahtémoc R > P > S. García (See supra Hernández. part I.B..) See The About employment LatCrit, supraof a credible note 3 threat,(listing thehowever, professors changes on thisthe payoffLatCrit structure Board toof RDirectors > P > S >and T, ortheir to R respective> P > T > S,law or schools).perhaps to R > T > P > S, depending on the severity of the threat and the resulting7 Campo new Sanovalue, ofLAT T.C RIT: LATINA AND LATINO CRITICAL LEGAL THEORY, INC,71 http://www.latcrit.org/content/campo Recall that the payoffs in the dilemma-sano/ (lastcan visitedbe stated July numerically 5, 2014). or algebraically8 Id. by the variables T, R, P, and S. We will follow this convention in the 9remainder Id. of this paper. 1306Vol. 47:4 Prisoner’s47 JO HN Dilemma MARS HALL and L. Coase REV. Theorem1306 Vol.1305 129147:4

Coasean bargain, both prisoners will most likely end up confessing – or “defecting” in the parlance of game theory – because defection is the only Nash equilibrium in the standard one-shot version of the Prisoner’s Dilemma. Since the defection payoff is equal to P (i.e., the “punishment” payoff for mutual defection), Prisoner 1’s payoff is equal to P1, while Prisoner 2’s payoff is P2. In the 3 standard version of the Prisoner’s Dilemma, however, P1 is equal to P2, since the payoffs are symmetrical. Following convention, and because these are the payoffs the prisoners will most likely receive if they are unable to bargainI. INTRODUCTION with each other, we shall refer to these defection payoffs as the “outside options” or “disagreement values”Building of the prisoners.upon the72 main theme of this year’s LatCrit Conference,If, however, Resistance the prisonersRising: Theorizingagree to cooperateand Building – a Crosslikely- Sectoroutcome Movements if bargaining, 4 this is allowedpaper (i.e. – the, our prisoners contribution will receiveto this Rlarger, the “reward”critical conversation) payoff for mutual challenges cooperation. one of the Therefore, dominant both paradi prisonersgms in areeconomics better andoff cooperatinglaw: the Coase because Theorem. cooperation5 Specifically, produces we a presentcollective a gainthought for- experiment,both prisoners what (i.e. we, R shall > P). call Or putthe another“pure Coasean way, the version” gains fromof the a famousCoasean Prisoner’s bargain inDilemma the Prisoner’s game. 6 DilemmaIn brief, whatare positive if the prisoners(i.e., R – P in> 0). this(This allgame assumes,-theory of parablecourse, thatwere neither allowed prisoner to cbreachesommunicate the agreementand bargain – awith possibility each other that insteadwe will exploreof being later.)held in separateBut cells,how willas inthe the prisoners standard split version the collective of the dilemma?gains from Would their ourCoasean prisoners bargain? strike Stated a mutually formally,-beneficial Prisoner and1 will collectively receive (R-optimal + P1 – 7 CoaseanP2)/2, and bargain, Prisoner as2 willthe receive Coase (R Theorem+ P2 – P 1)/2predicts?. Therefore,Or, each as preprisoner’sdicted sharein the of thestandard payoffs onedepends,-shot notversion only onof thethe valuePrisoner’s of his gainsDilemma from in tradewhich or bargaining the Coasean is notbargain allowed, (i.e.8, wouldthe reward they still payoff, end R), but also on the prisoners’ outside options or disagreement values (i.e., P1 and P2). 73 Nevertheless, in the standard version of 3 the A.W.dilemma, Tucker, since A Two the-Person prisoners’ Dilemma: outside The Prisoner’s options Dilemma are the (1950), same as reprinted in Philip D. Straffin, Jr., The Mathematics of Tucker: A Sampler, 14 (i.e.TWO,-Y PEAR1 =C. PM2)ATHEMATICS neither prisoner J. 228 (1983). in the Coasean version of the game can4 improveLatina & hisLatino bargaining Critical Legal position Theory, by Inc. improving, 2013 Biennial his outsideLatCrit optionConference or decreasingProgram Schedule that of (andthe otherRelated prisoner Events) (i.e., (2013),, each available prisoner’s at http://latcrit.org/media/medialibrary/2013/10/LatCrit2013_Conference_Prograpayoff for mutual cooperation is equal to R/2). Accordingly, since m_FinalR.pthe payoffsdf . in the standard version of the Prisoner’s Dilemma are 5 The Coase Theorem is named after the late Ronald Coase. Ronald H. Coase,symmetrical, The Problem they ofwill Social split Cost their, 3 gainsJ.L. &E evenly.CON. 1, 1–44 (1960). George Stigler,Thus however, far, thiswas theanalysis economist suggests who first that presented the prisoners the idea havenow knownevery asincentive the Coase to strikeTheorem. a CoaseanGEORGE J.bargain STIGLER and, THE cooperate, THEORY OF so P RICElong 113as (MacMillan,R/2 > P. But,3d ed. notice 1966). what George this Stigler analysis stated does Coase’s not tellidea us.as aIt “theorem” does not andtell coinedus whether the term “Coasethe prisoners Theorem.” Id.will, in fact, keep their mutual 6 See generally WILLIAM POUNDSTONE, PRISONER’S DILEMMA (Anchor Books 1993) (providing an overview and history of the origins of the dilemma); see also F. E. Guerra-Pujol, The Parable of the Prisoners, 5–9 (June 21, 2013) [hereinafter72 Cf. LUKE Guerra M. F-ROEBPujol,, BTheRIAN T.Parable MCCANN of, MtheIKHAEL Prisoners SHOR ] & (unpublishedMICHAEL R. manuscript)WARD, MANAGERIAL (on E CONOMICSfile : A PwithROBLEM Sauthor),OLVING APPROACHavailable 190 (3d ed.,at http://papers.ssrn.com/sol32014).) /papers.cfm?abstract_id=2281593, (explaining the prisoner’s73 See Johnparable). F. Nash, The Bargaining Problem, 18 ECONOMETRICA 155, 157- 158 7(1951).Id. Note that Nash uses the term “anticipations” to refer to the outside options8 See or infra disagreement Part I.B. values of the players. 1306Vol.1168 47:4 Prisoner’s47 JO HN Dilemma MARS HALL and L. Coase REV. Theorem13061168 Vol. 130747:4

promisesdifferent fromor whether its predecessors, they will particularlybreach them. since In itfact, had athe Coasean benefit bargainof two years may of planning.not solve the Coasean version of the Prisoner’s DilemmaLike thebecause shift Tin, theconference temptation scheduling, payoff, otherstill changeslurks in havethe takenbackground. place Sowithin long theas TLatCrit remains entity larger, including than R, eachconcerted prisoner efforts has toa countervailingcontinue a process incentive of institutionalization. to breach his promi Inse recent of cooperation: years, there the haslarger been T is,a growingrelative focusto R, onthe how more to likelycapitalize it is onthat its onecritical or both niche, of continuethe prisoners cultivating will defect. the next generation of critical scholars, and ensure that the baton of outsider jurisprudence is passed along. IV.Internally,THE ROLE the OF organizationUNCERTAINTY has, EXPONENTIAL shifted, including DISCOUNTING a gradual, AND changingELASTICITY of the guardIN THE inCOASEAN leadership, VERSION so to OF speak, THE P RISONERas well ’Sas a downsizing in administration.D ILEMMAFor example, from 2008 to the present, the Board of Directors was intentionally downsized, with a growingEven whennumber the ofprisoners Board seats are allowedbeing occupied to bargain by juniorwith eachlaw professors.other – either6 strategically or non-strategically, as in our Coasean thoughtAnother-experiment major abovedevelopment – and even is whenLatCrit’s they areacquisition able to makeof a physicalcredible threats,space for the the prisoners organization. may still The end property, up defecting. Campo It is Sanotrue (Spanishthat the foruse “Camp of credible Healthy,” threats or more might literally, change “Camp the Sanity”),temptation is apayoff ten- acrerelative parcel to ofthe land other located payoffs in ; Centralhowever, Florida. there 7are Purchased three non by- LatCrittrivial reasons in 2011, why the it spacemight is not. home First, to Theuncertainty Living Justiceposes a Centermajor andproblem the LatCritwith threats, Community since Campus.there will8 Thealways physical exist facilitysome level serves of unceras a meanstainty as“to tolevel whether the playing a threat field willand ingive fact LatCrit be carried activists out. a Anotherfighting chancesalient toproblem be heard.” with9 Thethreats space is exponential is intended discounting or the time dimension of a given threat; this is particularly relevant since tomost serve threats, as thehowever hub credible,of their willeducational, not be carried research, out until sometimeadvocacy in the and future. activism Lastly, to remedyanother thepotential imbalance problem and with threatsdeficiencies is the issueof the of currentprice elasticity legal system. of demand Having, since an the prisoners’independent responsiveness physical to abase threat has maybecome vary criticaldepending as on a numberuniversities of factors. and law schools increasingly are even less A. Uncertainty

“Uncertainty” refers to the positive probability that any Naming and Launching a New Discourse of Critical Legal Scholarship, 2 CoaseanHARV. LATINO bargain L. REV made. 1 (1997). between the prisoners will not be enforced dueSee to judicialalso LatCrit error Biennialor some Conferencesother extrajudicial, LATCRIT :factor. LATINA Essentially, & LATINO one’sCRITICAL decision LEGAL to TdefectHEORY , inI NCthe., Coaseanhttp://latcrit.org/content/conferences/latcrit version of the dilemma will- notbiennial only-conferences/ be a function (last visitedof the Julyseverity 5, 2013) of the(providing penalty a list for of breach the previous (i.e., conferences, and providing direct links to view symposia articles for some anyyears threats(found byor followingpromises themade respective during year’sthe courselink to ofits the corresponding prisoners’ negotiations),webpage). but it will also be a function of the probability of enforcement.Additionally, BothLatCrit of has these developed functions a substantial – severity body ofof scholarship penalty fromand probabilityseveral other of stand enforcement-alone symposia: – are inter uncertain alia the exSouth ante-North (i.e. ,Exchange, at the time the oneStudy must Space decide Series, whether the International to defect orand not). Comparative Generally Colloquia. speaking, LatCrit the Symposia, LATCRIT: LATCRIT: LATINA & LATINO CRITICAL LEGAL THEORY, less likely enforcement is, or the less severe the penalty for breach INC., http://latcrit.org/content/publications/latcrit-symposium/ (last visited Julyis, the 5, 2014).more likely the prisoners will defect. 6 OneThese possibleinclude Proferespssorsonse Marcto -theTizoc problem González, of Andrea uncertainty Freeman, is andto Césarextend Cuahtémoc the logic García of zeroHernández. transactions See About costs LatCrit to, suprathe enforcementnote 3 (listing thestage. professors Since theon theCoase LatCrit Theorem Board assumesof Directors costless and their bargaining, respective why law schools). not further assume costless enforcement? Could we not assume 7 Campo Sano, LATCRIT: LATINA AND LATINO CRITICAL LEGAL THEORY, IthatNC, http://www.latcrit.org/content/campo the prisoners are not only -sano/allowed (last tovisited bargain July 5,and 2014). make credible8 Id. threats and promises, but also that any resulting 9 Id. 1308Vol. 47:4 Prisoner’s47 JO HN Dilemma MARS HALL and L. Coase REV. Theorem1308 Vol.1307 129147:4

agreement to cooperate will be enforced perfectly and costlessly? This, in turn, raises a new question: does Coasean bargaining solve the Prisoner’s Dilemma even when enforcement is costless and perfect? Not necessarily, for the answer to our question now depends on how far in the future such enforcement will occur.

B. Exponential3 Discounting

The next question we shall consider is what role does time play in the Coasean versionI. I NTRODUCTIONof the Prisoner’s Dilemma? In general, notice that the Prisoner’s Dilemma presents an intertemporal choice.Building Each prisonerupon themust main weigh themenot only of thethis probability year’s thatLatCrit the otherConference, will defectResistance in the Rising: absence Theorizing of a Coasean and Buildingbargain (orCross the- probabilitySector Movements of breach, 4 this even paper with (i.e. a, ourCoasean contribution bargain), to thisbut largereach prisonercritical conversation)must also weigh challenges the present one of value the dominantof his own paradi defectiongms orin breacheconomics versus and thelaw: future the Coasevalue Theorem.of cooperation.5 Specifically, we present a thoughtAssume-experiment, that the what prisoners we shall are call allowed the “pure to bargain Coasean with version” each otherof the and famous have Prisoner’seach promised Dilemma to cooperate game. 6 inIn orderbrief, towhat obtain if the higherprisoners collective in thispayoffs game generated-theory fromparable mutual were cooperation. allowed Even to withcommunicate a Coasean and bargain bargain inwith place, each each other prisoner instead mustof being weigh held the in presentseparate valuecells, ofas breaching in the standard his promise version (i.e. of, defecting)the dilemma? versus Would the futureour prisoners or discounted strike a mutuallyvalue of- beneficialcooperating and (i.e.collectively, keeping-optimal his promise).Coasean bargain,That is, aseach the prisoner Coase mustTheorem still decidepredicts? whether7 Or, heas preferspredicted a reducedin the sentencestandard in onethe -shotpresent, version which ofis athe higher Prisoner’s payoff relativeDilemma to in his which other bargaining choices, versus is not the allowed, possibility8 would of theya penalty still endfor breach in the future. According to the standard economic model of behavior, 3 intertemporalA.W. Tucker, choices A Two -arePerson no Dilemma:different The from Prisoner’s other Dilemma choices, (1950), except as reprinted in Philip D. Straffin, Jr., The Mathematics of Tucker: A Sampler, 14 thatTWO-Y EARsomeC. MATHEMATICSconsequences J. 228 are (1983). delayed and hence must be anticipated4 Latina and& Latino “discounted” Critical Legal(i.e., recalibratedTheory, Inc., to2013 take Biennial into accountLatCrit theConference delay). Program74 But Schedule discounting (and Relatedgenerates Events) ,the (2013), possibility available atof http://latcrit.org/media/medialibrary/2013/10/LatCrit2013_Conference_Progra“exponential discounting.” That is, given two similar rewards, m_FinalR.ppeople generallydf. prefer the one that arrives sooner rather than the 5 The Coase Theorem is named after the late Ronald Coase. Ronald H. Coase,equivalent The Problemone later. of Social Stated Cost formally,, 3 J.L. &E peopleCON. 1,often 1–44 “(1960).discount” George or Stigler,reduce however,the value was of thethe economistlater reward who firstby a presented factor that the ideaincreases now known with theas the length Coase of Theorem. the delay. GEORGE This J.discounting STIGLER, T HEprocess THEORY is OFtraditionally PRICE 113 (MacMillan,modeled in 3d economics ed. 1966). asGeorge a form Stigler of exponential stated Coase’s discounting, idea as a “theorem” a time- andconsistent coined the model term of“Coase discounting. Theorem.”75 Id. 6 See generally WILLIAM POUNDSTONE, PRISONER’S DILEMMA (Anchor Books 1993) (providing an overview and history of the origins of the dilemma); see also F. E. Guerra-Pujol, The Parable of the Prisoners, 5–9 (June 21, 2013) [hereinafter74 See, e.g. Guerra, A D-ICTIONARYPujol, The OF Parable ECONOMICS of the108 –Prisoners09 (John] Black,(unpublished Nigar manuscript)Hashimzade & Gareth(on Mylesfile eds.,with 4th ed. author),2012) (providingavailable a standard at http://papers.ssrn.com/sol3definition of “discount” and/papers.cfm?abstract_id=2281593 “discounting the future” in economics)., (explaining the prisoner’s75 Some parable). experimental research has shown that the constant discount rate assumed7 Id. in exponential discounting is systematically being violated. Shane Frederick,8 See infra George Part I.B.Loewenstein & Ted O’Donoghue, Time Discounting and 1308Vol.1168 47:4 Prisoner’s47 JO HN Dilemma MARS HALL and L. Coase REV. Theorem13081168 Vol. 130947:4 differentIn the from case its of predecessors, the Prisoner’s particularly Dilemma, sinceour prisoners it had the are benefit more likelyof two toyears engage of planning. in exponential discounting when calculating the presentLike value the ofshift a reducedin conference prison scheduling,sentence (i.e. other, the changesgreater theirhave takendiscount place rate within is, the themore LatCrit they valueentity present, including personal concerted liberty efforts over tofuture continue liberty, a processand thus of institutionalization.the more they value In presentrecent years,liberty thereover hasfuture been liberty, a growing the more focus likely on how they to arecapitalize to defect). on its Does critical a Coasean niche, continuebargain betweencultivating the theprisoners next generationchange this of outcome?critical scholars,Not at alland – ensurethe outcome that thewill batonotn changeof outsider if the jurisprudence present value is orpassed utility along. of a Internally,reduced sentence the organizationtoday is greater has thanshifted, the expectedincluding or adiscounted gradual changingdisutility ofof athe penalty guard forin breachleadership, in theso distantto speak, future. as well In otheras a downsizingwords, it is inpossible administration. that the temptationFor example, payoff, from which 2008 is certainto the present,and will theoccur Board at oftime Dire T1,ctors might was outweighintentionally the downsized,possibility withof a abreach growing penalty, number wh ichof isBoard uncertain seats andbeing will occupied not occur by junioruntil timelaw professors.T2. 6 ThusAnother, because major any development penalty for breachis LatCrit’s will occur acquisition in the future, of a physicalthe present space utility for fromthe organization.a (certain) reduced The property,prison sentence Campo now Sano is (Spanishlikely to outweighfor “Camp the Heal futurethy,” disutilityor more ofliterally, an (uncertain) “Camp Sanity”),penalty for is abre tenach-acre in theparcel future! of land Of locatedcourse, inwhether Central the Florida. discounted7 Purchased disutility by ofLatCrit a future in 2011,penalty the forspace breach is home outweighs to The the Living present Justice value Center of a reducedand the LatCritsentence Community depends on Campus. several 8 criticalThe physical variables, facility including serves (i)as thea means size of“to the level future the playingor expected field andpenalty, give LatCrit(ii) the probaactivistsbility a thatfighting the chancebreach tois beenforced, heard.” 9and The (iii) space each is intendedprisoner’s discount rate. More to the point, however, we have identified the conditions under towhich serve our as prisoners the hub are of likely their to educational,defect even withresearch, a Coasean bargainadvocacy in place. and And, activism even underto remedy the standardthe imbalance assumptions and in moderndeficiencies economic oftheory, the currentthese conditions legal system. are not Having implausible an or far-fetched.independent physical base has become critical as Compare,universities for andexample, law schoolsthe related increasingly idea of interestare even (i.e. less, time value of money), a foundational concept in finance theory. 76 A certain amount of money today has a different buying power (value) than the same amount of money in the future because the Naming and Launching a New Discourse of Critical Legal Scholarship, 2 valueHARV. LofATINO money L. R EVat. 1 (1997).a future point of time includes the interest earnedSee alsoor inflationLatCrit Biennialaccrued overConferences a given, L ATperiodCRIT: ofL ATINAtime. &77 InLATINO the alCRITICALternative, LEGAL the TtimeHEORY value, INC .,of http://latcrit.org/content/conferences/latcritmoney can also be stated formally:- thebiennial sum-conferences/ of FV (last(future visited value) July 5,to 2013) be (providingreceived a inlist ofone the yearprevious is conferences, and providing direct links to view symposia articles for some discountedyears (found atby the following rate ofthe interest respective r to year’s give linka sum to itsof correspondingPV (present value)webpage). at present (i.e., PV = FV – r*PV = FV/(1+r)). This expressioAdditionally,n measures LatCrit hasthe developedpresent valuea substantial of a future body ofsum, scholarship discounted from toseveral the otherpresent stand by- alonean amount symposia: equal inter toalia the the timeSouth value-North ofExchange, money. theIn otherStudy words,Space Series,this concept the International allows the and valuation Comparative of a futureColloquia. stream LatCrit of Symposia, LATCRIT: LATCRIT: LATINA & LATINO CRITICAL LEGAL THEORY, INC., http://latcrit.org/content/publications/latcrit-symposium/ (last visited July 5, 2014). Time6 ThesePreference: include A CriticalProfessors Review Marc, 40-Tizoc J. E CONGonzález,. LITERATURE Andrea 351 Freeman, (2002). Thisand Césarpaper, Cuahtémochowever, will García follow Hernández. the standard See Abouteconomic LatCrit approach, supra and note assume 3 (listing a theconstant professors discount on rate. the LatCrit Board of Directors and their respective law schools).76 DAVID G. LUENBERGER, INVESTMENT SCIENCE ch. 2 (Oxford Univ. Press 1998).7 Campo Sano, LATCRIT: LATINA AND LATINO CRITICAL LEGAL THEORY, INC,77 http://www.latcrit.org/content/campo That is, the value of money changes-sano/ over (last timevisited because July 5, there2014). is an opportunity8 Id. to earn interest on the money and because inflation will tend to drive9 Id.prices up, thus reducing the “value” of the money in the future. Id. at 12. 1310Vol. 47:4 Prisoner’s47 JO HN Dilemma MARS HALL and L. Coase REV. Theorem1310 Vol.1309 129147:4

income, such that the future steam is “discounted” and then added together, thus providing a lump-sum “present value” today of the entire income stream. Like the time value of money, there is also a time value of time, so to speak. One way of measuring the magnitude of each prisoner’s incentive to breach (i.e., the probability that either prisoner will breach or defect), 3even with a Coasean bargain in place, is by analyzing the role that time plays in his or her decision -making. The prisoners not only prefer personal liberty to the absence thereof (timeI. inINTRODUCTION prison), but we would also expect the value or utility of liberty in the present to be worth more to each prisonerBuilding than libertyupon inthe the main future. theme In other of words,this year’sthe “time LatCrit value Conference,of time” means Resistance that personal Rising: liberty Theorizing in the presentand Building is worth Cross more- Sectorthan in Movements the future,, 4 thisand paperlikew ise,(i.e. ,time our contributionin prison in to the this present larger imposescritical conversation)a greater disutility challenges than one time of inthe prison dominant in the paradi future.gms Inin addition,economics independent and law: the of Coasethe effect Theorem. that 5 timeSpecifically, has on wethe presentdecision a- makingthought -experiment,of the prisoners, what wewe mustshall callfurther the consider“pure Coasean the prisoners’ version” responsivenessof the famous toPrisoner’s the payoffs Dilemma in the game.Prisoner’s6 In Dilemma.brief, what That if theis, prisonersin predicting in whetherthis thegame prisoners-theory willparable defect wereor cooperate allowed in theto cCoaseanommunicate version and of bargain the dilemma, with each the otherprice insteadelasticity of beingof demand held inof separateeach prisoner cells, mustas in also the be standard considered. version of the dilemma? Would our prisoners strike a mutually-beneficial and collectively-optimal Coasean bargain, C. asPrice the ElasticityCoase Theoremof Demand predicts? 7 Or, as predicted in the standard one-shot version of the Prisoner’s DilemmaHere, in we which pose bargaining one last isimportant not allowed, question8 would regarding they still endour Coasean version of the Prisoner’s Dilemma. If a prison sentence operates like a price, 78 then what happens when the price 3 elasticityA.W. Tucker,of demand A Two of-Person each Dilemma:prisoner The is Prisoner’sdifferent? Dilemma In economics, (1950), as reprinted in Philip D. Straffin, Jr., The Mathematics of Tucker: A Sampler, 14 theTWO -YtermEAR C.“elasticity”MATHEMATICS generally J. 228 (1983). refers to the percentage change in one4 variableLatina & Latinowith respectCritical Legalto a Theory,percentage Inc., 2013change Biennial in anotherLatCrit variable,Conference orProgram the ratio Schedule of the(and logarithmic Related Events) derivatives, (2013), ofavailable the two at variables.http://latcrit.org/media/medialibrary/2013/10/LatCrit2013_Conference_Progra79 Specifically, the “price elasticity of demand” is a numericalm_FinalR.pdf or. quantitative measure of how responsive the demand 5 The Coase Theorem is named after the late Ronald Coase. Ronald H. ofCoase, a given The Problemgood or ofservice Social is Cost to ,a 3change J.L. &E inCON the. 1,price 1–44 of (1960). that goodGeorge or service.Stigler, however, In the wascase the of economist the Prisoner’s who first Dilemma, presented thefor idea example, now known the “good”as the beingCoase demandedTheorem. G byEORGE the J.prisoners STIGLER , isT HEpersonal THEORY liberty OF PRICE (i.e. 113, a (MacMillan,reduced pris 3d oned. 1966).sentence). George Elasticity Stigler stated in Coase’sthis caseidea aswould a “theorem” thus andmeasure coined the termprisoners’ “Coase Theorem.”responsiveness Id. to changes in the prison 6 See generally WILLIAM POUNDSTONE, PRISONER’S DILEMMA (Anchor Bookssentence. 1993) (providing an overview and history of the origins of the dilemma); see also F. E. Guerra-Pujol, The Parable of the Prisoners, 5–9 (June 21, 2013) [hereinafter Guerra-Pujol, The Parable of the Prisoners] (unpublished manuscript)78 See generally (on Gary fileS. Becker,with Crime andauthor), Punishment: available An Economic at Approachhttp://papers.ssrn.com/sol3, 76 JOURNAL OF/papers.cfm?abstract_id=2281593 POLITICAL ECONOMY 169, 179-180, (1968).(explaining the prisoner’s79 HARRY parable). H. PANJER, FINANCIAL ECONOMICS WITH APPLICATIONS 101 (Actuarial7 Id. Found. 1998). See also CAMPBELL MCCONNELL, STANLEY BRUE, AND8 SSeeEAN infra FLYNN Part, E I.B.CONOMICS 114-116 (18th ed. 2009). 1310Vol.1168 47:4 Prisoner’s47 JO HN Dilemma MARS HALL and L. Coase REV. Theorem13101168 Vol. 131147:4 differentThus from far, its however, predecessors, we haveparticularly assumed since that it hadthe theprisoners’ benefit elasticitiesof two years are of planning.the same, a standard but unstated assumption in most,Like if not the a ll,shift treatments in conference of the Prisoner’sscheduling, Dilemma. other changes Specifically, have takenwe have place assumed within that the both LatCrit prisoners entity share, including a “unitary concerted elastic” efforts (i.e., toe =continue 1) demand a process schedule. of institutionalization.In other words, we haveIn recent assumed years, that there the hasprisoners been ashare growing the focussame on set how of totime capitalize preferences on its regardingcritical niche, the continuepayoffs in cultivating the Prisoner’s the next Dilemma: generation they of bothcritical uniformly scholars, prefer and ensureshorter thatprison the sentences baton of to outsider longer ones.jurisprudence Stated formally, is passed we along. have Internally,not only assumed the organization that the prisoners has shifted, derive includinga greater aamount gradual of changingutility (or ofa thelower guard level in ofleadership, disutility) so the to speak,shorter astheir well prison as a downsizingsentences are, in butadministration. we have also Forassumed example, that thefrom prisoners 2008 toobtain the present,the same the levels Board of “utility”of Dire ctorsor “disutility,” was intentionally as the case downsized, may be, fromwith athe growing payoffs number(prison sentences)of Board seatsin the being Prisoner’s occupied Dilemma. by junior (Note law professors.that in economics,6 “utility” is an abstract or mathematical representationAnother majorof preferencesdevelopment over is LatCrit’ssome set acquisitionof goods ofand a physicalservices. 80space) In thefor casethe organization.of the Prisoner’s The Dilemma,property, anCampo additional Sano (Spanishunit of timefor “Camp in prison Healthy,” generates or more an literally, additional, “Camp and Sanity”), perhaps is adiminishing, ten-acre parcel level of of landdisutility located on inthe Central prisoners. Florida. 7 Purchased by LatCritThus, in 2011,the question the space above is home(i.e., whatto The happens Living if Justicethe prisoners’ Center andelasticities the LatCrit of demand Community are different?) Campus. becomes8 The physical: what happensfacility serveswhen asPrisoner a means 1’s demand“to level forthe personal playing libertyfield and (i.e. give a reduced LatCrit sentence) activists isa fightinginelastic chance(i.e., eto1 1)? Beforeto serve we asproceed the hubto answer of their this educational, question, letresearch, us explain “inelastic”advocacy and “elastic”and activism demand to andremedy illustrate the imbalancethese concepts and with a simpledeficiencies numerical of example.the current The legaldemand system. of a goodHaving is “elastic”an (i.e., independentmore responsive physical to pricebase changes)has become when criticalthe perc asentage changeuniversities in the price and of thatlaw goodschools is lessincreasingly than the arepercentage even less change in quantity demanded. 81 For example, when e = 1.5, this means that a 50% decline in price will cause a 75% increase in the quantity demanded. 82 In contrast, demand is “inelastic,” or less Naming and Launching a New Discourse of Critical Legal Scholarship, 2 responsiveHARV. LATINO to L. changes REV. 1 (1997). in price, when the percentage change in the priceSee ofalso a LatCritgood exceedsBiennial theConferences percentage, LAT CRITchange: LATINA in &quantity LATINO demanded.CRITICAL LEGAL83 For T HEORYexample,, INC when., http://latcrit.org/content/conferences/latcrit e = 0.5, this means that a 50%- declinebiennial -conferences/in price will (last only visited cause July 5,a 2013) 25% (providing increase a listin ofthe the quantity previous conferences, 84and providing direct links to view symposia articles for some demanded.years (found byThus, following in thethe caserespective of theyear’s Prisoner’s link to itsDilemma, corresponding the conceptwebpage). of elasticity refers to the prisoners’ responsiveness to changesAdditionally, in the LatCrit payoffs has of developed the game. a substantialFor example, body Prisonerof scholarship 1 might from beseveral highly other responsive stand-alone tosymposia: small changesinter alia thein theSouth prison-North sentence;Exchange, theas such,Study Spacehis demand Series, thefor Internationalpersonal liberty and Comparative would be Colloquia.elastic. OnLatCrit the Symposia, LATCRIT: LATCRIT: LATINA & LATINO CRITICAL LEGAL THEORY, INC., http://latcrit.org/content/publications/latcrit-symposium/ (last visited July 5, 2014). 806 TheseFor an include influential Profe treatmentssors Marc of -utilitiesTizoc González, in economics, Andrea see VONFreeman, NEUMANN and César& MORGENSTERN Cuahtémoc, Garcíasupra noteHernández. 21, at ch.See 3,About 17– 31LatCrit (providing, supra a notemathematical 3 (listing treatmentthe professors of utilitieson the andLatCrit assigning Board utilitiesof Directors to probability and their distributionsrespective law of alternatives).schools). 817 CCampoOOTER Sano& ULEN, L,AT supraCRIT :note LATINA 67, atAND 29. LATINO CRITICAL LEGAL THEORY, INC,82 http://www.latcrit.org/content/campo Id. -sano/ (last visited July 5, 2014). 838 Id. Id. 849 Id. Id. 1312Vol. 47:4 Prisoner’s47 JO HN Dilemma MARS HALL and L. Coase REV. Theorem1312 Vol.1311 129147:4

other hand, Prisoner 2 might be far less responsive even to large changes in the payoffs, and therefore, his demand for liberty would be inelastic. The most important determinant of the price elasticity of demand is the availability of substitutes for the good in question. 85 Generally speaking, the elasticity of demand will be greater where there are more substitutes for a 3particular good, and, likewise, the elasticity will be lower where there are fewer substitutes. 86 In the case of the Prisoner’s Dilemma, however, the responsiveness of the prisoners to the payoffsI. mayINTRODUCTION vary depending on certain individual factors unique to each prisoner. Although there are few, if any, substitutesBuilding for uponpersonal the libertymain theme(i.e., you of arethis either year’s free LatCrit or in Conference,prison), the Resistancelevel of disutilityRising: Theorizingof being inand prison Building may Cross vary- Sectordepending Movements on a wide, 4 this variety paper of (i.e. individual, our contribution factors, such to this as, largerinter aliacritical, one’s conversation) age, income, challenges marital one ofstatus, the dominant or history paradi ofgms prior in convictions.economics and We law: would the expect Coase aTheorem. young prisoner,5 Specifically, a wealthy we presentprisoner, a orthought a prisoner-experiment, with whata wife we and shall children, call the for“pure example, Coasean to version”behave differentlyof the famous than Prisoner’san old prisoner, Dilemma a poor game. one,6 orIn onebrief, with what no familyif the prisonersties. Likewise, in athis prisoner game -whotheory is aparable first- timewere offender, allowed might to cqualifyommunicate for probation and bargain or a rehabilitationwith each other program, instead whereas of being a heldrepeat in separateoffender cells,might as facein thea standardmandatory version-minimum of the prisondilemma? term. Would In ouraddition, prisoners we wouldstrike expecta mutually the quality-beneficial of theand prisoncollectively sentence-optimal or typeCoasean of prisonbargain, (i.e. , asa highthe securityCoase prisonTheorem with predicts? limited7 visitationOr, as rightspredicted versus in thea low standard security, one college-shot- campusversion typeof theprison Prisoner’s with a goodDilemma library, in whichinternet bargaining access, andis not liberal allowed, visitation8 would rights)they still – andend not just the quantity of time in prison – to influence the behavior of the prisoners in the Prisoner’s Dilemma. 3 A.W.In other Tucker, words, A Two the-Person use ofDilemma: general The labels, Prisoner’s such Dilemma as “Prisoner (1950), 1”as reprinted in Philip D. Straffin, Jr., The Mathematics of Tucker: A Sampler, 14 andTWO -Y“PrisonerEAR C. MATHEMATICS 2” (or “A ”J. and228 (1983).“B”), to describe the players in the Prisoner’s4 Latina &Dilemma Latino Criticalis tooLegal reductionist Theory, Inc. , and2013 Biennialpossibly LatCriteven misleadingConference Programbecause Schedule such labels(and Relatedabstract Events) away, (2013), the problemavailable ofat elasticity.http://latcrit.org/media/medialibrary/2013/10/LatCrit2013_Conference_Progra Accordingly, we need more – not less – information aboutm_FinalR.p thedf . prisoners’ individual circumstances and specific 5 The Coase Theorem is named after the late Ronald Coase. Ronald H. characteristicsCoase, The Problem in orderof Social to measureCost, 3 J.L. their&E respectiveCON. 1, 1–44 responsiveness (1960). George toStigler, the payoffshowever, in was the the Prisoner’s economist Dilemma who first presentedgame. the idea now known as theInstead Coase Theorem.of ignoring GEORGE this J.critical STIGLER ,information, THE THEORY letOF PusRICE now113 procee(MacMillan,d under 3d ed. a 1966). different George set Stigler of assumptions.stated Coase’s ideaIn theas a following“theorem” threeand coined examples, the term assume “Coase Theorem.” that we Id.have sufficient information about 6 See generally WILLIAM POUNDSTONE, PRISONER’S DILEMMA (Anchor theBooks individual1993) (providing prisoners an overview in andorder history to of themeasure origins ofor the atdilemma); least approximatesee also F. E. Guerratheir -Pujol,actual The elasticities. Parable of the Example Prisoners ,#1 5– 9assumes (June 21, 2013)that the[hereinafter price elasticity Guerra- Pujol,of demand The Parablefor personal of the liberty Prisoners of both] (unpublished prisoners manuscript) (on file with author), available at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2281593, (explaining the prisoner’s85 Id. at parable). 29. 867 Id. “The more substitutes for a good, the greater the elasticity of demand; the 8fewerSee infra the substitutes,Part I.B. the lower the elasticity.” Id. at 29–30. 1312Vol.1168 47:4 Prisoner’s47 JO HN Dilemma MARS HALL and L. Coase REV. Theorem13121168 Vol. 131347:4 isdifferent elastic from(i.e. , itse >predecessors, 1). Example particularly #2 considers since the itmore had interestingthe benefit caseof two of years a highly of planning. inelastic prisoner playing against a highly elastic one. LikeAnd, theExample shift in#3 conferenceconsiders prisonersscheduling, with other inelastic changes demand have takencurves place(i.e., ewithin < 1). the LatCrit entity, including concerted efforts to continue a process of institutionalization. In recent years, there has been a Examplegrowing focus #1: eon > 1how to capitalize on its critical niche, continue cultivating the next generation of critical scholars, and ensureTo thatbegin, the assume baton thatof outsider both prisoners jurisprudence are highly is passed elastic along. (i.e., Internally,responsive) tothe changes organization in the payoffshas shifted, in the standardincluding version a gradual of the changingPrisoner’s ofDilemma. the guard In inthis leadership, case, we wouldso to speak,expect noas changewell as ina downsizingthe prisoners’ in responsesadministration. to the payoffsFor example, in the gamefrom because2008 to theirthe present,levels of theutility Board or ofdisutility Directors from was the intentionally payoffs remain downsized, unchanged with arelative growing to numbereach other. of Board So longseats asbeing the occupiedresponsiveness by junior of lawthe professors.prisoners to6 changes in the payoffs run in the same direction (i.e., so longAnother as both major prisoners development are price iselastic LatCrit’s or price acquisition inelastic), ofboth a physicalprisoners space still prefer for the to spendorganization. less time The in prison property, to more Campo time. Sano (Spanish for “Camp Healthy,” or more literally, “Camp Sanity”), is a ten-acre parcelExample of land #2: located e > 1, ein < Central1 Florida. 7 Purchased by LatCrit in 2011, the space is home to The Living Justice Center and theNext, LatCrit consider Community the more Campus. interesting8 The case physical of a highly facility inelastic serves asprisoner a means playing “to lagainstevel the aplaying highly fieldelastic and one. give Contrary LatCrit toactivists the first a fightingexample, chance assume to bethat heard.” the9 Thecorresponding space is intended elasticities of the prisoners in the standard one-shot version of the Prisoner’s Dilemmato serverun inas oppositethe hub directions:of their educational,Prisoner 1’s research, demand for personaladvocacy liberty andis highly activism elastic to (i.e.remedy, e1 >the 10 ),imbalance while Prisoner and 2’s desire deficienciesto stay out of prisonthe current is highly legal inelastic system. (i.e. , eHaving2 < 0.1 ).an Under these independentconditions, bothphysical prisoners base still has prefer become short prisoncritical sentences as to longuniversities ones, but and Prisoner law schools 1 is muchincreasingly more responsiveare even less to any changes in the payoffs of the Prisoner’s Dilemma than Prisoner 2 is. Does this scenario alter the likely outcome or equilibrium of the dilemma? Naming and Launching a New Discourse of Critical Legal Scholarship, 2 HARV.We LATINO believe L. R EVit . does.1 (1997). Under this scenario, Prisoner 1 is much moreSee likelyalso LatCritto defect Biennial than ConferencesPrisoner , 2 LATbecauseCRIT: LATINAPrisoner & L1,ATINO as “defined”CRITICAL LbyEGAL his TelastHEORYicity, INC curve,., http://latcrit.org/content/conferences/latcrit is more responsive to the payoffs- ofbiennial the game.-conferences/ In particular, (last visited Prisoner July 5, 2013) 1 – (providinglike Prisoner a list of2 the– wants previous (i) conferences, and providing direct links to view symposia articles for some yearsthe lowest (found possibleby following sentence the respective(i.e., T, year’sthe Temptation link to its correspondingPayoff) and webpage).(ii) to avoid the worst possible payoff (i.e., S, the dreaded Sucker’s PayAdditionally,off). However, LatCrit Prisoner has developed 1 –a substantialunlike Prisoner body of scholarship2 – is more from responsiveseveral other to stand the- alonepossibility symposia: of (i)inter obtaining alia the Souththe Temptation-North Exchange, Payoff, the asStudy well Space as (ii) Series, avoiding the theInternational humiliating and Sucker’sComparative Payoff. Colloquia. LatCrit Symposia, LATCRIT: LATCRIT: LATINA & LATINO CRITICAL LEGAL THEORY, What about Prisoner 1’s inelastic cohort, Prisoner 2? By INC., http://latcrit.org/content/publications/latcrit-symposium/ (last visited definition,July 5, 2014). Pri soner 2 is less responsive to changes in the payoffs than6 ThesePrisoner include 1 becauseProfessors Prisoner Marc-Tizoc 2’s González,demand forAndrea liberty Freeman, is highly and inelasticCésar Cuahtémoc (i.e., e 2García < 0.1 Hernández.). Prisoner See 2’s About behavior, LatCrit , therefore,supra note 3will (listing be themuch professors harder onto thepredict LatCrit for Board multiple of Directors reasons. and On their the respective one hand, law schools). Prisoner 2 – like all prisoners, presumably – prefers a short prison 7 Campo Sano, LATCRIT: LATINA AND LATINO CRITICAL LEGAL THEORY, IsentenceNC, http://www.latcrit.org/content/campo to a long one. On the other-sano/ hand, (last Prisoner visited July 2 (i.e. 5, 2014)., e2 < 0.1) is 8less Id. responsive to changes in the payoffs than the average 9 Id. 1314Vol. 47:4 Prisoner’s47 JO HN Dilemma MARS HALL and L. Coase REV. Theorem1314 Vol.1313 129147:4

prisoner (i.e., e = 1), and is far less responsive to such changes than Prisoner 1 (i.e., e1 > 10). We would thus expect Prisoner 2 to be highly unresponsive to the prosecutor’s strategic offer of leniency in exchange for his confession. Therefore, whether Prisoner 2 decides to defect or to cooperate will, most likely, depend on his personal value system and other relevant or applicable3 extra-strategic factors (e.g. age, income, marital status, etc.). And yet, it is these factors that are completely ignored or abstracted away in game theory. Put another way, if PrisonerI. 2INTRODUCTION is already predisposed to reject any potential plea bargain or offer of leniency from the prosecutor (e.g. becauseBuilding of Prisoner upon the2’s valuemain system),theme ofthen this he year’sis unlikely LatCrit to Conference,confess or accept Resistance a plea bargainRising: exTheorizing post (i.e. , andafter Buildingthe prosecutor’s Cross- Sectoroffer of Movementsa reduced sentence, 4 this paper is on (i.e.the , table).our contribution87 to this larger critical conversation) challenges one of the dominant paradigms in economics andExample law: the #3 :Coase e < 1 Theorem. 5 Specifically, we present a thought-experiment, what we shall call the “pure Coasean version” of theLastly, famous what Prisoner’s happens Dilemma when both game. prisoners’6 In brief, demand what curvesif the areprisoners highly ininelastic? this Or,game what-theory is theparable most werelikely allowedoutcome orto equilibriumcommunicate ofand the bargain game with when each otherboth insteadprisoners of beingare heldhighly in unresponsiveseparate cells, to as changes in the standardin the payoff version structure of the ofdilemma? the Prisoner’s Would Dilemma?our prisoners Simply strike put, a allmutually bets are-beneficial off in thisand scenario.collectively Similar-optimal to theCoasean discussion bargain, concerning as the Prisoner Coase 2Theorem in example predicts? #2 above,7 Or,factors as externalpredicted toin thethe Prisoner’sstandard Dilemmaone-shot versionmodel willof theinfluence Prisoner’s the behaviorDilemma ofin thewhich prisoners bargaining in thisis not example allowed, more8 would than they the still actual end payoffs. D. Lessons and Discussion 3 A.W. Tucker, A Two-Person Dilemma: The Prisoner’s Dilemma (1950), as reprinted in Philip D. Straffin, Jr., The Mathematics of Tucker: A Sampler, 14 TWO-YTheseEAR C. threeMATHEMATICS examples J. 228of the(1983). role of elasticity in the Prisoner’s Dilemma4 Latina teach & Latino us an Critical important Legal andTheory, non Inc.-trivial, 2013 lesson Biennial about LatCrit the ConferencePrisoner’s ProgramDilemma Schedule model (andand Relatedabout gameEvents) ,theory (2013), inavailable general at. http://latcrit.org/media/medialibrary/2013/10/LatCrit2013_Conference_PrograGame theory is best able to predict the behavior of players in the m_FinalR.pPrisoner’sdf Dilemma. (and other games) when their demand curves 5 The Coase Theorem is named after the late Ronald Coase. Ronald H. Coase,are inelastic The Problem (i.e., ofe was1) or the when economist their whoelasticities first presented are unitary the idea (i.e. now, eknown = 1). asSince the theCoase behavior Theorem. of suchGEORGE inelastic J. STIGLER players, T HEwill T HEORYdepend OF less PRICE on the113 (MacMillan,payoffs of a3d givened. 1966). model George and Stiglermore onstated real Coase’s-world ideafactors as aoutside “theorem” of andthe coinedformal the termmodel, “Coase the Theorem.” predictive Id. power of game theory will 6 See generally WILLIAM POUNDSTONE, PRISONER’S DILEMMA (Anchor Booksdecrease 1993) as (providing the prisoners’ an overview preferences and history ofbecome the origins more of theresponsive dilemma); see(i.e. also, their F. E. demand Guerra -Pujol,curves The become Parable more of the elastic).Prisoners Indeed,, 5–9 (June this 21, lesson 2013) [hereinafter Guerra-Pujol, The Parable of the Prisoners] (unpublished manuscript) (on file with author), available at http://papers.ssrn.com/sol387 But it is worth noting/papers.cfm?abstract_id=2281593 that if Prisoner 2 is already predisposed, (explaining ex ante the to prisoner’sconfess or parable).strike a deal with the prosecutor (for reasons not captured in the abstract7 Id. Prisoner’s Dilemma model), then he will probably still confess ex post, despit8 Seee his infra highly Part inelastic I.B. demand curve. 1314Vol.1168 47:4 Prisoner’s47 JO HN Dilemma MARS HALL and L. Coase REV. Theorem13141168 Vol. 131547:4

isdifferent not only from consistent its predecessors, with one particularly of the key since insights it had ofthe Thomas benefit Schelling’sof two years classic of planning. study “The Strategy of Conflict.”88 It also builds uponLike Schelling’s the shift seminal in conference work by scheduling, specifying otherthe limits changes of gamehave takentheory. place By studyingwithin thethe LatCrittheoretical entity relation, including between concerted the behavior efforts toand continue choices a ofprocess the playersof institutionalization. and their respective In recent elasticities years, there of hasdemand, been aour growing work focushas identifiedon how to circumstances capitalize on itsin criticalwhich niche,game continuetheory models cultivating are likely the tonext be generationhelpful and ofwhen critical they scholars, are likely and to ensureprove incomplete, that the batomisleading,n of outsider or wrong. jurisprudence is passed along. Internally, the organization has shifted, including a gradual V.changingA BRIEF of D IGRESSIONthe guard RinEGARDING leadership, THE soR OLEto speak,OF THIRD as PwellARTIES as INa downsizing in administration.THE PRISONER For ’Sexample, DILEMMA from 2008 to the present, the Board of Directors was intentionally downsized, with a growingBefore numberproceeding of anyBoard further, seats webeing shall occupied return byone junior last timelaw toprofessors. the standard,6 or non-Coasean version, of the Prisoner’s DilemmaAnother to exploremajor thedevelopment relation betweenis LatCrit’s the prisonersacquisition and of the a prosecutorphysical space in thefor thestandard organization. version Theof this property, parable. Campo Stated Sano in general(Spanish terms, for “Camp we shallHeal thy,”consider or more the literally,relation of“Camp the “thirSanity”),d-party is payoffa ten- acreadministrator” parcel of land to Playerslocated in1 andCentral 2 in Florida. the general7 Purchased or logical by formLatCrit of thein 2011,game. the space is home to The Living Justice Center and theWhatever LatCrit one Community thinks of Campus. our Coasean8 The thoughtphysical- experimentfacility serves or Coaseanas a means version “to lofevel the the Prisoner’s playing fieldDilemma, and give it is LatCrit worth notingactivists that a Coaseanfighting chancebargaining to be isheard.” already9 The taking space pl isace, intended even in the standard versions of the parable presented above. But instead of direct bargainingto serve between as thethe prisonershub of theirthemselves educational, (which research,as we saw is not allowedadvocacy in andthe standardactivism versionto remedy of thethe Prisoner’simbalance Dilemma), and the bargainingdeficiencies that of isthe taking current place legal in this system. game Havingis between an each prisonerindependent and the prosecutor physical separately.base has become critical as Theuniversities standard and formulations law schools increasinglyof the Prisoner’s are even Dilemmaless presuppose not just two prisoners or players but also a “third- party payoff administrator” (such as the prosecutor in the original formulation of the parable). That is, in addition to the players or Naming and Launching a New Discourse of Critical Legal Scholarship, 2 prisoners,HARV. LATINO the L. RPrisoner’sEV. 1 (1997). Dilemma also requires a third-party to administerSee also theLatCrit payoffs Biennial of this Conferences game, with, L ATpayoffsCRIT: dependingLATINA & onLATINO the choicesCRITICAL madeLEGAL byT HEORYthe players., INC., 89http://latcrit.org/content/conferences/latcrit This third party is not really a- neutralbiennial- conferences/arbiter or (last mere visited “payoff July 5, 2013)administrator.” (providing a listInstead, of the previoushe is conferences, and providing direct links to view symposia articles for some tryingyears (found to manipulate by following the the choices respective of the year’s players link byto gettingits corresponding them to confesswebpage). or “snitch” in the classic version of the parable, and, moreover,Additionally, his LatCritconduct has isdeveloped another a substantialform of “bargaining” body of scholarship with fromthe players.several other stand-alone symposia: inter alia the South-North Exchange, the StudyThe Space presence Series, theof Internationalthe prosecutor and Comparative or “third Colloquia.-party LatCritpayoff Symposia, LATCRIT: LATCRIT: LATINA & LATINO CRITICAL LEGAL THEORY, administrator” in the standard versions of the parable thus poses INC., http://latcrit.org/content/publications/latcrit-symposium/ (last visited 90 anJuly important5, 2014). but neglected subsidiary question. Doesn’t the 6 These include Professors Marc-Tizoc González, Andrea Freeman, and César Cuahtémoc García Hernández. See About LatCrit, supra note 3 (listing the 88professors See generally on the THOMAS LatCrit C. BoardSCHELLING of Directors, THE S TRATEGYand their OF respective CONFLICT law(2d schools).ed. 1980). 897 CampoFor example, Sano, RichardLATCRIT Dawkins: LATINA refersAND LtoATINO the roleCRITICAL of the L “banker”EGAL THEORY in his, IpresentationNC, http://www.latcrit.org/content/campo of the parable. RICHARD DAWKINS-sano/ ,(last THE visited SELFISH July G AME5, 2014). 203, 206– 07, 2178 Id.– 18, 225–26 (2d ed. 1989). 909 Id. See, e.g., F. E. Guerra-Pujol, The Poker-Litigation Game 3, n.5 (Dec. 26, 1316Vol. 47:4 Prisoner’s47 JO HN Dilemma MARS HALL and L. Coase REV. Theorem1316 Vol.1315 129147:4

presence of this third party (i.e., his ability to offer lighter sentences or more favorable payoffs to the prisoners) affect the outcome of the game? Would the prisoners still defect in the one- shot version of the parable if the role of the prosecutor or other third party were removed from the game? Recall that the standard or “canonical” version of the Prisoner’s Dilemma is classified3 as a “non-cooperative game” because the prisoners in the dilemma are not allowed to communicate or negotiate with each other. 91 Nevertheless, although the prisonersI. areINTRODUCTION not allowed to bargain with one another, it is critical to note that the prosecutor is, in fact, allowed to communicateBuilding upon and bargainthe main with themethe prisoners. of this The year’s prosecutor LatCrit in Conference,the standard Resistance versions ofRising: the dilemma Theorizing is, inand essence, Building bargaining Cross- Sectorwith eachMovements prisoner, 4 this separately paper (i.e. ,and our contributionsequentially, to makingthis larger a temptingcritical conversation) “take it or leavechallenges it” offer one toof eachthe dominant one. Although paradi neithergms in prisonereconomics is andallowed law: tothe make Coase a Theorem.counteroffer5 Specifically, to the prosecutor, we present each a prisonerthought- experiment,must still decide what whetherwe shall tocall accept the “purethe prosecutor’s Coasean version” initial offer.of the Infamous the standardPrisoner’s one Dilemma-shot vers game.ion 6 ofIn the brief, dilemma, what if boththe prisoners willin mostthis likelygame accept-theory the parableprosecutor’s were offer allowed(i.e., agree to ctoommunicate confess), because and bargain confession with eachis the other dominant instead strategy of being or held Nash in separateequilibrium cells, of thisas in game. the standard version of the dilemma? Would our prisonersIn short, thestrike prisoners a mutually are, -inbeneficial fact, already and collectivelyengaged in-optimal a form Coaseanof Coasean bargain, or voluntary as thebargaining Coase inTheorem the standard predicts? version7 Or, of theas prePrisoner’sdicted inDilemma. the standard Although one they-shot areversion not allowedof the toPrisoner’s bargain Dilemmawith each inother, which they bargaining are allowed is notto bargain,allowed, 8sowould to speak, they withstill endthe prosecutor. But, the collective outcome of these separate Coasean bargains with the prosecutor leaves both prisoners much worse off 3 thanA.W. if they Tucker, had Adecided Two-Person to reject Dilemma: the Theprosecutor’s Prisoner’s offerDilemma and (1950), remain as reprinted in Philip D. Straffin, Jr., The Mathematics of Tucker: A Sampler, 14 Tsilent.WO-YEAR C. MATHEMATICS J. 228 (1983). 4 ThisLatina analysis & Latino of Criticalthe dilemma Legal Theory,thus refutes Inc., 2013the CoaseBiennial Theorem; LatCrit Conferenceit shows Programhow self Schedule-seeking (and Coasean Related bargainingEvents), (2013), (i.e. available, Coasean at http://latcrit.org/media/medialibrary/2013/10/LatCrit2013_Conference_Prograbargaining between each prisoner and the prosecutor) generates a m_FinalR.pworse collectivedf. outcome for the prisoners. One could argue that 5 The Coase Theorem is named after the late Ronald Coase. Ronald H. Coase,this conclusion The Problem is ofpremature Social Cost because,, 3 J.L. &E givenCON. the1, 1 –structure44 (1960). Georgeof the Stigler,payoffs however,in the wasstandard the economist version who of firstthe presentedPrisoner’s the Dil ideaemma, now known it is asvery the likely Coase thatTheorem. the prisonersGEORGE J.would STIGLER have, T HEdefected THEORY anyways. OF PRICE But113 (MacMillan,this conclusion 3d ed. is 1966). not prematureGeorge Stigler at all,stated at Coase’sleast not idea with as a respect “theorem” to andthe coinedPrisoner’s the term Dilemma. “Coase Theorem.” For the Id.prisoners to defect, they must be 6 See generally WILLIAM POUNDSTONE, PRISONER’S DILEMMA (Anchor Booksable to 1993) strike (providing a bargain an overview with the and prosecutor. history of the That origins is, thereof the dilemma);must be see also F. E. Guerra-Pujol, The Parable of the Prisoners, 5–9 (June 21, 2013) [hereinafter Guerra-Pujol, The Parable of the Prisoners] (unpublished manuscript)2012) (unpublished (on manuscript)file with(on file author),with author), available available at http://papers.ssrn.com/sol3http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2193993/papers.cfm?abstract_id=2281593 , (explaining(providing thea prisoner’ssimple model parable). in which the role of the banker is made explicit). 917 Id. See Tucker, supra note 3 and accompanying text; LUCE & RAIFFA, supra note8 17,See atinfra 94– Part95 and I.B. accompanying text. 1316Vol.1168 47:4 Prisoner’s47 JO HN Dilemma MARS HALL and L. Coase REV. Theorem13161168 Vol. 131747:4 someonedifferent from(i.e., itsthe predecessors, prosecutor) particularlywith the ability since toit hadoffer the a benefitlighter prisonof two yearssentence of planning. in exchange for the prisoners’ confessions. By contrast,Like ifthe the shift District in conference Attorney scheduling, is prevented other from changes bargaining have takenwith theplace prisoners, within the or LatCrit if the entity prisoners, including are concertedprevented effortsfrom tobargaining continue witha process the D.A.,of institutionalization. then it is less likely In recentthat the years, prisoners there haswill beenend aup growing defecting. focus Inon howshort, to incapitalize a world on itsin criticalwhich niche,“plea continuebargaining” cultivating is prohibited, the next the generation prisoners ofare critical probably scholars, better andoff ensuregoing to that trial theand batotakingn of their outsider chances. jurisprudence is passed along. Internally,Despite thethis organizationanalysis, most has gameshifted, theorists including would a probablygradual changingagree that, of duethe toguard the instructure leadership, of the so payoffsto speak, in asthe wellstandard as a downsizing“one-shot” versionin administration. of the Prisoner’s For Dilemma,example, defectionfrom 2008 is stillto the present,most likely the Boardoutcome of Direin ctorsone-shot was dilemmasintentionally – downsized,even when with all abargainin growingg numberis prohibited. of Board Once seats we being allow occupied Coasean by bargainingjunior law professors.between the6 prisoners, however, we see that there are three sets of potentialAnother bargains major in thedevelopment Prisoner’s isDilemma. LatCrit’s Specifically, acquisition there of isa thephysical possibility space forof thea Coaseanorganization. bargain The betweenproperty, theCampo prisoners Sano themselves(Spanish for, especially“Camp Heal in thy,”the Coaseanor more versionliterally, of “Campthe dilemma, Sanity”), but is therea ten -acreis also parcel the possibilityof land located of a separatein Central bargain Florida. between7 Purchased Prisoner by 1LatCrit and thein 2011,prosecutor the spaceas well is homeas the to possibilityThe Living of Justicean additional Center bargainand the betweenLatCrit CommunityPrisoner 2 andCampus. the prosecutor.8 The physical The facility possibility serves of threeas a meansseparate “to sets level of thebargains playing in fieldthe Prisoner’sand give LatCritDilemma activists suggests a thatfighting the chanceoutcome to beof heard.”such a9 threeThe space-person is intendedinteraction might be a complex one and possibly unpredictable. We thus conclude this paper toby serveconducting as the a hubpreliminary of their explorationeducational, of research,the relation betweenadvocacy complexity and activismtheory andto remedy the Coaseanthe imbalance version andof the Prisoner’sdeficiencies Dilemma. of the current legal system. Having an independent physical base has become critical as VI.universitiesSOME CLOSING and TlawHOUGHTS schools ON increasingly THE COMPLEXITY are even OF THEless PRISONER’S DILEMMA

The classic or standard version of the Prisoner’s Dilemma Naming and Launching a New Discourse of Critical Legal Scholarship, 2 paintsHARV. L ATINOa misleading L. REV. 1 (1997).picture of the game being played and the numberSee also of players.LatCrit ItBiennial purports Conferences to be a, twoLAT-CplayerRIT: L modelATINA &when, LATINO in reality,CRITICAL thereLEGAL are T HEORYat least, IthreeNC., http://latcrit.org/content/conferences/latcrit different persons playing this game:- thebiennial two-conferences/ prisoners (last as visitedwell Julyas 5,the 2013) prosecutor (providing a(and list ofthe the previouspolice). conferences, and providing direct links to view symposia articles for some Therefore,years (found instead by following of a thedyad respective or two- partyyear’s interactiolink to itsn, corresponding we have a triadwebpage). or three-party interaction, one that is more complex and with manyAdditionally, more relevantLatCrit has variables. developed aSuch substantial stories body as of thescholarship Prisoner’s from Dilemmaseveral other and stand the-alone Rancher symposia:-Farmer inter alia Parable, the South however,-North Exchange, purposely the ignoreStudy Spacesuch Series,endogenous the International and exogenous and Comparative variables –Colloquia. variables LatCrit that Symposia, LATCRIT: LATCRIT: LATINA & LATINO CRITICAL LEGAL THEORY, could very well influence the outcome of these interactions. In a INC., http://latcrit.org/content/publications/latcrit-symposium/ (last visited realJuly -5,life 2014). Prisoner’s Dilemma, for example, the prisoners are likely to find6 These themselves include Profe embeddedssors Marc in -aTizoc larger González, network Andrea of players, Freeman, all and of whomCésar Cuahtémoc are ignored García in theHernández. existing See legal About and LatCrit economics, supra literature note 3 (listing on the Coaseprofessors Theorem on the andLatCrit the BoardPrisoner’s of Directors Dilemma. and their respective law schools). Suffice it to say, the different variables that shape the 7 Campo Sano, LATCRIT: LATINA AND LATINO CRITICAL LEGAL THEORY, preferencesINC, http://www.latcrit.org/content/campo of the prisoners and-sano/ the (last prosecutor visited July 5,make 2014). the Prisoner’s8 Id. Dilemma a potentially very complex game. Moreover, as 9 Id. 1318Vol. 47:4 Prisoner’s47 JO HN Dilemma MARS HALL and L. Coase REV. Theorem1318 Vol.1317 129147:4

more variables and degrees of elasticities influence the triadic relation among the prisoners and prosecutor, the more complex their interaction becomes. Such a triadic and multivariable interaction thus invites the use of a different approach, such as complexity theory. 92 This, however, will be the subject of a future paper. 3 VII. CONCLUSION

Before concluding, I.we INTRODUCTIONwish to say a few words about our general approach to the question posed in the title of our paper as well Buildingas our emphasisupon the on mainquestions theme (as ofopposed this toyear’s answers LatCrit) or “knownConference, unknowns” Resistance93 throughout Rising: Theorizingthis paper. Toand paraphrase Building StuartCross- SectorFirestein, Movements a neurobiologist, 4 this paper at Columbia(i.e., our contributionUniversity, toour this implicit larger premisecritical conversation)in these pages challenges is that communal one of the ignorance dominant (that paradi whichgms wein doeconomics not yet and know)law: theis Coasethe mainTheorem. fountain5 Specifically, of knowledge we present and a discovery.thought-experiment,94 According what to Firestein,we shall call ignorance the “pure promotes Coasean discovery version” becauseof the famousit motivates Prisoner’s persons Dilemma engaged game. in6 scienceIn brief, to whatsearch if thefor answers,prisoners andin thisthis pursuit,game- theoryin turn, parable leads towere new allowed questions: to “[ignorance]communicate isand not bargain an individualwith each otherlack insteadof information of being heldbut ina communalseparate cells, gap asin inknowledge the standard . . . This version is knowledgeable of the dilemma? ignorance, Would ourperceptive prisoners ignorance, strike ainsightful mutually -beneficialignorance. andIt leadscollectively us to-optimal frame Coaseanbetter questions, bargain, theas firstthe stepCoase to gettingTheorem better predicts? answers.”7 Or,95 Weas believepredicted this in counterintuitivethe standard oneand-shot critical version logic of alsothe appliesPrisoner’s to economicsDilemma ina ndwhich law, bargaining and to the is socialnot allowed, sciences8 would generally. they stillRather end than restating what we already know (or think we know), as many conventional legal scholars and economists tend to do, we make 3 greaterA.W. progress Tucker, Awhen Two- Personwe pose Dilemma: new and The nonPrisoner’s-trivial Dilemma questions (1950), (i.e. as, reprinted in Philip D. Straffin, Jr., The Mathematics of Tucker: A Sampler, 14 questionsTWO-YEAR C.toM whichATHEMATICS we do J. not228 yet (1983). know the answers). 4 InLatina this &paper, Latino then, Critical we Legalidentified Theory, the Inc.essential, 2013 elementsBiennial LatCritof the oneConference-shot, twoProgram-player Schedule Prisoner’s (and Dilemma,Related Events) the ,simplest (2013), availableand most at famoushttp://latcrit.org/media/medialibrary/2013/10/LatCrit2013_Conference_Progra of all models in game theory, and then presented a pure Coaseanm_FinalR.p versiondf. of the dilemma, one in which the prisoners are 5 The Coase Theorem is named after the late Ronald Coase. Ronald H. allowedCoase, The to Problemcommunicate of Social and Cost bargain, 3 J.L. with&E CONeach. 1, other 1–44 ,(1960). and not George just withStigler, the however, prosecutor. was the We economist found whothat first even presented when the ideaprisoners now known are allowedas the Coase to communicate Theorem. GEORGE and J.bargain STIGLER with, THE each THEORY other, OF PthereRICE 113 is (MacMillan, 3d ed. 1966). George Stigler stated Coase’s idea as a “theorem” and coined the term “Coase Theorem.” Id. 92 6 See generallygenerally M ELANIE WILLIAM M ITCHELLPOUNDSTONE, COMPLEXITY, PRISONER: A ’GS UIDEDDILEMMA TOUR (Anchor(2009). BooksFor applications 1993) (providing to law, ansee overview Orlando I.and Martínez history- García,of the originsThe Person of the in dilemma); Law, seethe Numberalso F. E. in GuerraMath, 18-Pujol, AM. TheU. J. Parable OF GENDER of the PrisonersSOC. POL’Y, 5– 9& (June L. 503 21, (2010). 2013) [hereinafter93 Moran Cerf,Guerra Known-Pujol, Unknowns The Parable, 336 SCIof. 1382the (2012)Prisoners (reviewing] (unpublished STUART manuscript)FIRESTEIN, I GNORANCE(on : HOWfile IT DRIVESwith S CIENCEauthor), (2012)). available at http://papers.ssrn.com/sol394 By “ignorance,” we/papers.cfm?abstract_id=2281593 follow Firestein in meaning “the, (explainingabsence of fact,the understanding,prisoner’s parable). insight, or clarity about something.” STUART FIRESTEIN, IGNORANCE7 Id. : HOW IT DRIVES SCIENCE 6 (2012). 958 See Id. infraat 7. Part I.B. 1318Vol.1168 47:4 Prisoner’s47 JO HN Dilemma MARS HALL and L. Coase REV. Theorem13181168 Vol. 131947:4 somedifferent positive from itsprobability predecessors, that particularlythey might sincenot strikeit had thea Coasean benefit bargain.of two years Furthermore, of planning. we found that even if they are able to negotiateLike thea mutuallyshift in conferencebeneficial scheduling,agreement other(e.g. throughchanges havenon- takenstrategic place bargaining), within the there LatCrit is alsoentity some, including positive concertedprobability efforts that tothey continue could stilla process breach of suchinstitutionalization. an agreement andIn recent end upyears, defecting, there hascontrary been toa growingwhat the focus Coase on Theoremhow to capitalize predicts. on In its either critical case, niche, the continueprobability cultivating of defection the is next a function generation of various of critical factors, scholars, including and ensuresuch thingsthat the as bato uncertainty,n of outsider exponentialjurisprudence discounting, is passed along.and Internally,elasticity. the organization has shifted, including a gradual changingThis ofconclusion the guard – thein leadership,possibility ofso defectionto speak, in asthe well Coasean as a downsizingversion of dilemmain administration. – is theoretically For example,significant from because 2008 it allto butthe refutespresent, or the falsifies Board theof DireCoasectors Theorem. was intentionally It is also worth downsized, noting withthat oura growing conclusion number is not of based Board on seats ad hocbeing behavioral occupied or by psychological junior law professors.quirks of 6human behavior. Uncertainty, exponential discounting, and Anotherelasticity majorare all developmentpart of the standardis LatCrit’s economics acquisition toolkit ofand a arephysical based space on thefor standardthe organization. rationality The assumption property, ofCampo economics. Sano The(Spanish main for contribution “Camp Heal ofthy,” the thoughtor more-experiment literally, “Camp presented Sanity”), in this is papera ten- acre – our parcel Coasean of land version located of the in Prisoner’sCentral Florida. Dilemma7 Purchased – is that by it LatCritposes many in 2011, deep andthe spacedifficult is questions,home to The and Livingthis paper Justice is our Center first andattempt the inLatCrit search Community of answers Campus.… and new8 The questions. physical facility serves as a means “to level the playing field and give LatCrit activists a fighting chance to be heard.”9 The space is intended

to serve as the hub of their educational, research, advocacy and activism to remedy the imbalance and deficiencies of the current legal system. Having an independent physical base has become critical as universities and law schools increasingly are even less

Naming and Launching a New Discourse of Critical Legal Scholarship, 2 HARV. LATINO L. REV. 1 (1997). See also LatCrit Biennial Conferences, LATCRIT: LATINA & LATINO CRITICAL LEGAL THEORY, INC., http://latcrit.org/content/conferences/latcrit- biennial -conferences/ (last visited July 5, 2013) (providing a list of the previous conferences, and providing direct links to view symposia articles for some years (found by following the respective year’s link to its corresponding webpage). Additionally, LatCrit has developed a substantial body of scholarship from several other stand-alone symposia: inter alia the South-North Exchange, the Study Space Series, the International and Comparative Colloquia. LatCrit Symposia, LATCRIT: LATCRIT: LATINA & LATINO CRITICAL LEGAL THEORY, INC., http://latcrit.org/content/publications/latcrit-symposium/ (last visited July 5, 2014). 6 These include Professors Marc-Tizoc González, Andrea Freeman, and César Cuahtémoc García Hernández. See About LatCrit, supra note 3 (listing the professors on the LatCrit Board of Directors and their respective law schools). 7 Campo Sano, LATCRIT: LATINA AND LATINO CRITICAL LEGAL THEORY, INC, http://www.latcrit.org/content/campo-sano/ (last visited July 5, 2014). 8 Id. 9 Id.