1. George Mason School of Law
Contracts I
T. Contract Law
in the State of Nature
F.H. Buckley

2. What if bargains aren’t possible?
Hobbes on the State of Nature
If a covenant be made wherein neither of the parties perform presently, but trust one another, in the condition of mere nature (which is a condition of war of every man against every man)
Hobbes, Leviathan (1651) 2 2

3. What if bargains aren’t possible?
Hobbes on the State of Nature
If a covenant be made wherein neither of the parties perform presently, but trust one another, in the condition of mere nature (which is a condition of war of every man against every man) upon any reasonable suspicion, it is void…
For he that performeth first hath no assurance the other will perform after, because the bonds of words are too weak to bridle men's ambition, avarice, anger, and other passions, without the fear of some coercive power; which in the condition of mere nature, where all men are equal, and judges of the justness of their own fears, cannot possibly be supposed. And therefore he which performeth first doth but betray himself to his enemy.
Hobbes, Leviathan (1651) 3 3

4. Credible Commitments in a State of Nature4 4

5. Credible Commitments in a State of Nature
Self-binding 5 5

6. Credible Commitments in a State of Nature
1. Self-binding
2. Union 6 6

7. Credible Commitments in a State of Nature
1. Self-binding
2. Union
Reciprocal Altruism 7 7

8. Credible Commitments in a State of Nature
1. Self-binding
2. Union
3. Reciprocal Altruism
4. Social and Internalized Norms 8 8

9. 1. Self-binding
I might persuade another party to trust me if I make it difficult for me to breach 9 9

10. Self-binding: Ulysses and the Sirens10 10

11. Self-binding: Hostages
I might persuade another party to trust me if I make it painful for me to breach
The use of hostages 11 11

12. Self-binding: Hostages
Why are hostages killed if ransoms are not paid? 12 12

13. Self-binding: Hostages
Why might a retailer refuse to settle slip-and-falls? 13 13

14. Self-binding: Secured Lending
How is this self-binding? 14 14

15. 2. Union strategies 15 15

16. Union strategies Marriage amongst princely families
Victoria and Albert, 1840 16 16

17. Union strategies: Families Doug Allen and Dean Lueck, The Nature of the Farm (MIT Press, 2003)17 17

18. Union strategies: Vertical Integration
As a response to post-contractual opportunism:
Klein, Crawford,
Alchian, 21 J.L. & Econ. 297 (1978)
Armen Alchian 18 18

19. 3. Reciprocal Altruism 19 19

20. 3. Reciprocal Altruism Robert Trivers, 46 Quart. Rev. Biol. 35 (1971)20 20

21. A genetic basis to reciprocal altruism?
Fish employing the cooperative strategy 21 21

22. A genetic basis to reciprocal altruism?22 22

23. Reciprocal Altruism in Game Theory
Axelrod, The Evolution of Cooperation (1984)
Tit-for-tat as a dominant strategy for iterated PD games 23 23

24. Reciprocal Altruism in Game Theory
Round 1:
Cooperate
or Defect
Round 2: Cooperate
Round 3: Cooperate
Round 4: Cooperate
Round 5: Cooperate
Round 6: Cooperate
Round 7: Cooperate
Round 8: Cooperate
Round 9: Cooperate
Round 10: Cooperate
Round 11: Cooperate
Round 12: Cooperate
Round 13:
Round 14: Cooperate
Round 15: Cooperate
Round 16: Cooperate
Round 17: Cooperate
Round 18: Cooperate
Round 19: Cooperate
Round 20: Cooperate
Round 21: Cooperate
Round 22: Cooperate
Round 23: Cooperate
Round 24: Cooperate
Round 25: Cooperate
Round 26: Cooperate
Round 27: Cooperate
Round 28: Cooperate
Round 29: Cooperate
Round 30: Cooperate
Axelrod’s Iterated Prisoners’ Dilemma 24 24

25. TFT in action Carpaccio, The Legend of St. Ursula:
The Arrival of the English Ambassadors 25 25

26. Example of TFT communities Old-boy networks
Bullington Club
members, 1987
2. David Cameron
8. Boris Johnson 26 26

27. 4. Social and Internalized Norms
Ruth Benedict on shame cultures
The Chrysanthemum and the Sword (1989) 27 27

28. Social Norms: Honor Not fight? “I would feel terrible shame
before the Trojans
and their wives
of the flowing robes.”
Iliad 6:441 28 28

29. Social Norms: Honor Yet if I fight and die, "I see you there in Argos,
toiling for some other woman
at the loom, or carrying water
from an alien well ...
“There goes the wife of Hector”
they will say when they
see your tears. “He was the
champion of the Trojans,
when Ilium was besieged.”
And every time they say it,
you will feel another pang at the
loss of the one man who might
have kept you free."
Hector to Andromache. 29 29

30. Internalized Norms When Shame becomes Guilt
“There is a man
inside me who
is angry with me”
Thomas Browne
Georges de la Tour,
Repentant Magdalene 30

31. Visible Guilt and the Lemons Problem
If Homo Economicus Had a Choice, Would He Want a Conscience?
Robert Frank, 77 AER 593 (1987) 31 31

32. Visible Guilt and the Lemons Problem
Which explains why we have faces… 32 32

33. Deception detection: Guilt and facial signals Zygomatic smiles
Paul Ekman, Darwin and Facial Expressions (1973); What the Face Reveals (1997) 33 33

34. Microexpressions
We are able to detect visual cues that can be seen for only a fraction of a moment 34 34

35. Microexpressions De la Tour, The Fortune Teller35 35

36. Microexpressions
De la Tour, The Fortune Teller 36 36

37. Microexpressions
De la Tour, The Fortune Teller 37 37

38. Microexpressions
De la Tour, The Fortune Teller 38 38

39. Microexpressions
De la Tour, The Fortune Teller 39 39

40. Microexpressions
De la Tour, The Fortune Teller 40 40

41. Microexpressions 41 41

42. Make the Mule You are a plainclothes
detective at LAX, charged with identifying drug smugglers as they exit a plane.
How do you pick them out? 42