Shavell’s paper is a reply to the paper by Seana Shiffrin; and, on Wed., we will both conclude our discussion of Shiffrin’s paper (see that reading guide) and begin our discussion of Shavell’s.
• The first assignment from Shavell’s paper (the introductory paragraphs and §I) summarizes the argument that Shiffrin has criticized. Since she summarized it in her paper, Shiffrin’s account will mainly expand on material you’ve already seen. Of course, Shavell is presenting these ideas as a basis for responding to Shiffrin’s criticism, so you should be alert for differences in emphasis, if not substance, from her presentation of his argument.
• Shavell’s §II and conclusion provide his response to her criticisms. As you assess their positions, watch for two sorts of differences.
• One lies something like the difference between consequentialism and deontology. This probably comes out most clearly in the third of his points in §II.D. He focuses on maximizing the (expected) value to each party while in the corresponding discussion (pp. 1565f of her paper), she had focused on the difference between performance and its monetary value.
• The other difference is less easy to characterize but appears in the differing ways they employ hypothetical considerations. In this regard, compare the second paragraph of Shavell’s §II.A with Shiffrin’s §I.B: he considers incentives to alter individual terms of a contract while she asks what might happen if the parties renegotiated from scratch.