Using the ldeas:Railroads and Wheat Fields Four different legal rules Four possible outcomes Spaghetti diagram:How to get each outcome from each rule Tells us how to choose a rule if we only knew enough Not only transaction costs and probability of optimal outcome being #X But also judicial technology And what range of cases the rule will apply to Pick that rule for which the net benefit is highest Summed over everyone affected And very situation to which the rule will ever be appliedUsing the Ideas: Railroads and Wheat Fields • Four different legal rules • Four possible outcomes • Spaghetti diagram: How to get each outcome from each rule • Tells us how to choose a rule if we only knew enough • Not only transaction costs and probability of optimal outcome being #X • But also judicial technology • And what range of cases the rule will apply to • Pick that rule for which the net benefit is highest • Summed over everyone affected • And very situation to which the rule will ever be applied