Law Commons^™

How To Repair Unconscionable Contracts, Omri Ben-Shahar

Law & Economics Working Papers Archive: 2003-2009

Several doctrines of contract law allow courts to strike down excessively one-sided terms. A large literature explored which terms should be viewed as excessive, but a related question is often ignored—what provision should replace the vacated excessive term? This paper begins by suggesting that there are three competing criteria for a replacement provision: (1) the most reasonable term; (2) a punitive term, strongly unfavorable to the overreaching party; and (3) the maximally tolerable term. The paper explores in depth the third criterion—the maximally tolerable term—under which the excessive term is reduced merely to the highest level that the law considers …

Paying To Save: Tax Withholding And Asset Allocation Among Low- And Moderate-Income Taxpayers, Michael S. Barr, Jane Dokko

Law & Economics Working Papers Archive: 2003-2009

We analyze the phenomenon that low- and moderate-income (LMI) tax filers exhibit a “preference for over-withholding” their taxes, a measure we derive from a unique set of questions administered in a dataset of 1,003 households, which we collected through the Survey Research Center at the University of Michigan. We argue that the relationship between their withholding preference and portfolio allocation across liquid and illiquid assets is consistent with models with present-biased preferences, and that individuals exhibit self-control problems when making their consumption and saving decisions. Our results support a model in which individuals use commitment devices to constrain their consumption. …

Subsidiarity And Proportionality In European Law, Linda Margaret Broughton

Linda Margaret Broughton

The principle of subsidiarity is enshrined in Article five of the Treaty of the European Union, requiring action from the European Community institutions only if national action is insufficient in accomplishing the objectives of the proposed action. Often required to determine the limitations of actions of a national or Community actor within the Treaty, the European Court of Justice has begun developing an inferred definition of the principle of subsidiarity through its rulings and reasonings. Subsidiarity is inherent in the reasoning of the case of Omega Spielhallen-und Automatenaufstellungs-GmbH v Oberbürgermeisterin der Bundesstadt Bonn; however, the principle is undermined in the …

The Impossibility Of A Prescriptive Paretian, Robert C. Hockett

Cornell Law Faculty Publications

Most normatively oriented economists appear to be “welfarist” and Paretian to one degree or another: They deem responsiveness to individual preferences, and satisfaction of one or more of the Pareto criteria, to be a desirable attribute of any social welfare function. I show that no strictly “welfarist” or Paretian social welfare function can be normatively prescriptive. Economists who prescribe must embrace at least one value apart from or additional to “welfarism” and Paretianism, and in fact will do best to dispense with Pareto entirely.

The Rise Of Customary Businesses In International Financial Markets: An Introduction To Islamic Finance And The Challenges Of International Integration, Ali A. Ibrahim

Ali A Ibrahim

This paper demonstrates theoretical foundations of Islamic finance and their correlation with the Islamic finance industry. In this respect, the paper presents an over-all survey of the Islamic finance industry, Islamic-law injunctions pertaining to Islamic finance, quasi regulatory institutions, financial engineering, transaction structures and the evolving practices. The paper also highlights various areas of further research, a comprehensive treatment of which is critical to the continuing growth of Islamic finance in the international financial markets.

Emerging Market Competition Policy: The Brazilian Experience, Joseph Silvia

Joseph Silvia

Abstract: Emerging Market Competition Policy: The Brazilian Experience Brazilian competition policy has developed over decades into a policy system that has allowed Brazil to lead South American nations in generating economic growth and sustainability, as well as the development of a “fully functioning market economy” in Brazil. The Brazilian Competition Policy System regulates merger control, competitive behavior among Brazilian firms, antitrust issues, and economic stability within regulation. Brazil’s policies have been crucial to the nation’s development from mostly state-owned enterprise and government interference in the markets after World War II. Brazil’s status as an emerging economy has also required that …

The Debate Over An Economic Interpretation Of The Constitution: Where Has Beard Taken Us And Where Are We After Mcguire’S “New” Interpretation?, Joseph Silvia

Joseph Silvia

The Debate over an Economic Interpretation of the Constitution: Where has Beard taken us and where are we after McGuire’s “New” Interpretation? Since 1913, developing a complete analysis on the creation of the American Constitution necessarily requires a thorough consideration of economics. Until Charles A. Beard published his An Economic Interpretation of the Constitution of the United States (1913), the standard account of the Founding Era was that the Framers acted out of idealism – a disinterested, public-regarding impulse to promote democratic ideals for which the Revolution was fought and the American Republic was founded. Beard challenged this idealistic view …

The Human Factor: Globalizing Ethical Standards In Drug Trials Through Market Exclusion, Fazal R. Khan

Fazal Khan

This paper proposes a framework of international soft law and domestic drug regulations to a priori remove incentives for unethical clinical drug research in developing nations. The globalization of drug testing is very problematic from a bioethics perspective. While stringent regulations in the U.S. or E.U. may pose an adequate check on unethical research practices, many multinational corporations are engaging in regulatory arbitrage by outsourcing ethically questionable research to countries with less restrictive regulations. Given the tremendous financial reward a blockbuster therapy might generate, there is a strong incentive to move more research and development to countries with even looser …

Analizando Económicamente El Éxito Del Análisis Económico Del Derecho, Enrique Pasquel

Enrique Pasquel

El análisis económico del derecho es una disciplina sumamente popular en Perú. De hecho, Perú quizá es el país latinoamericano en el que más se escribe y lee de AED. Esto se puede explicar económicamente.

Who Cares About Director Independence? Presentation (Pdf Format), Paolo Santella, Carlo Drago, Giulia Paone

Paolo Santella

No abstract provided.

Who Cares About Director Independence? Presentation (Pdf Format), Paolo Santella, Carlo Drago, Giulia Paone

Carlo Drago

No abstract provided.

Climate Change, Regulatory Fragmentation, And Water Triage, Robin K. Craig

Robin K. Craig

Fresh water is a regulatorily fragmented resource – that is, water is subject to multiple assertions of regulatory authority and to multiple types of use right claims that those authorities regulate. As fresh water supplies become increasingly unequal to task of meeting the multiple demands for both consumptive and in situ use, and as consumptive and in situ uses of water come increasingly into irreconcilable conflict, the various regulatory schemes governing water have also increasingly come into legal conflict. These courtroom battles have revealed many tensions, overlaps, and gaps in the overall governance of water as a natural resource, especially …

The Rule 10b5-1 Loophole: An Empirical Study, Alexander P. Robbins

Alexander P Robbins

This paper is the culmination of an MVP2 Law and Economics Student Fellowship at the University of Chicago Law School, for which the author received the John M. Olin Prize in Law and Economics. It seeks to empirically examine the effects of an insider trading loophole created by the Securities and Exchange Commission's Rule 10b5-1. Rule 10b5-1 creates a safe harbor for pre-planned securities transactions (or 10b5-1 plans), so long as the 10b5-1 plans are irrevocable and established prior to the trader's obtaining inside information. The SEC has taken the position, however, that it lacks the legal authority to prevent …

The Hidden Harm Of Law And Economics, Daniel Cohen

Daniel Cohen

The paper deals with the adverse psychodynamic consequences to an individual and to society, immediately and in the long run, of dissolving individual responsibility for fault as in the doctrine of Law and economics.

On Mutual Mistakes, Daniel Cohen

Daniel Cohen

Herein we reconsider what has for over a century been a judicial inconsistency inspiring mostly dismissive scorn. We find a classical disparity in judicial reasoning to have a surprising hidden profundity and we identify it as a sincere though unintentional attempt of erstwhile courts to perform what would today be seem as an admirable effort of social policy making. We shall examine a curious pair of seemingly inconsistent rulings from a century ago and conclude that they are actually consistent with the principles of Law and Economics as understood today, although they were at that time uncomfortably incongruous. The only …

Rubin V. The Islamic Republic Of Iran - A Struggle For Control Of Persian Antiquities In America, James A. Wawrzyniak

James A Wawrzyniak Jr

This paper analyzes the multi-jurisdictional attachment and execution proceedings taking place sub nomine Rubin v. The Islamic Republic of Iran. The Rubin litigation raises novel issues in the areas of art law and foreign relations. The first section of the paper evaluates whether third parties have standing to raise a sovereign state’s immunity under the Foreign Sovereign Immunities Act (“FSIA”). The second delves into the particulars of the commercial use exception to the FSIA. The final section considers various provisions of the Terrorism Risk Insurance Act of 2001, a new law with little judicial gloss. These three main issues are …

Making The Sale On Contingent Valuation, Sameer H. Doshi

Sameer H Doshi

Scholarship and jurisprudence have not seriously considered the question of whether the contingent valuation (CV) technique of monetizing preferences for non-tradeable public goods is consistent with the Daubert standards for scientific evidence. The greatest difficulty is in establishing that CV is testable and has measurable error rates; this problem is consonant with criticisms that economists have leveled at the CV method more generally. Additionally, the “state of the art” of contingent valuation practice has recommended the use of the willingness-to-pay question format for CV, rather than willingness-to-accept. This is misplaced in many cases, particularly in calculating damages in environmental tort …

Predatory Buying And The Antitrust Laws, John E. Lopatka, Roger D. Blair

John E Lopatka

No abstract provided.

Property, Persona, And Publicity, Deven R. Desai

Deven R. Desai

This article focuses on a paradox latent within the nature of creative phenomenon: although one can find strong arguments for control over intangible creations during one’s life, these arguments falter if not fail after the creator dies. Two interconnected problems posed by the growth of online creation illustrate the problem. First, unlike analog creations, important digital creations such as emails are mediated and controlled by second parties. Thus although these creations are core intellectual property, they are not treated as such and service providers terminate or deny access to people’s property all the time. In addition, when one dies, some …

Renting The Good Life, Jim Hawkins

Jim Hawkins

Academic literature and court decisions are replete with calls to ban or severely inhibit the rent-to-own industry. The argument is simple enough: Rent-to-own firms charge exorbitant prices to the most needy and vulnerable segments of society. The case for burdensome regulations, however, is much more difficult to make out than past scholarship has admitted. For the most part, academics have proceeded directly to propose specific regulations for the industry without first carefully analyzing the rent-to-own business or the reasons for imposing drastic regulations. This Article examines the theoretical justifications for regulating the rent-to-own industry against the backdrop of interviews I …

Large-Scale Disasters Attacking The American Dream: How To Protect And Empower Homeowners And Lenders, Matthew D. Ekins

Matthew D Ekins

The 2005 hurricane season reminded the world that such catastrophes can and do occur anywhere at anytime. Recovery efforts continue long after tides recede and after-shocks cease. In the context of Hurricane Katrina, this article examines the homeowner-lender relationship to determine risks natural disasters pose to the mortgage industry, likely repercussions a fallout in the mortgage industry may have on the health of the general economy, and what preventative steps have been and may be taken to prevent further economic suffering in a post-catastrophe environment.

Virtual World Taxation: Theories Of Income Taxation Applied To The Second Life Virtual Economy, Timothy J. Miano

Timothy J Miano

A virtual world is a computer simulated environment in which users interact with each other via graphical representations of themselves. Second Life is one such virtual world released by Linden Lab in 2003. One of the most important and interesting aspects of virtual worlds is the depth and sophistication of the economies that develop among the users. In fact, some virtual worlds, including Second Life, have currency exchanges where users can trade real-world currencies for virtual-world currency and vice versa. This means that the currency, goods, and services within the virtual-world marketplace have a corresponding real-world monetary value. The implication …

Why Limit Charity?, Miranda P. Fleischer

Miranda P. Fleischer

In the wake of Hurricane Katrina, Congress temporarily lifted one of the most puzzling limits in the tax Code: the cap that prevents an individual from claiming a charitable deduction greater than 50% of her income, even if she gives more than half her income to charity. Although scholars often criticize the cap in passing for creating unnecessary complexity, few have explored its theoretical underpinnings or the broader question of whether an individual who gives all her income to charity should still pay some tax. Those who have appear hard-pressed to find a satisfactory answer to that question.

This Article …

Searching For Robin Hood: Suggested Legislative Responses To Kelo, Mark Seidenfeld

Mark Seidenfeld

This article is a short essay that employs an economic analysis of the need for and potential abuses of eminent domain used to transfer property from one private entity to another. It adds to the current literature by suggesting that states can establish mechanisms for evaluating and compensating current landowners for the idiosyncratic value they place on their property, and can establish administrative procedures and judicial review essentially to require local governments to auction the opportunity to obtain the property to the private entity that will provide the greatest benefit to the jurisdiction.

Scenarios For Sustainable Peace In Colombia By Year 2019, Gustavo A. Gomez-Sorzano

GUSTAVO A GOMEZ-SORZANO Jr.

This paper presents the simulation results of the model of cyclical terrorist murder for Colombia (Gómez-Sorzano 2005) on the purpose of doing sensitivity analysis to help the country in the design of a national policy bringing sustainable peace before year 2019. The first part presents 11 scenarios 2005-2010. The final section shows 18 additional scenarios 2006-2019. According to them sustainable peace will be granted before year 2019.

Successful Stories And Stories Of Success: Reflections On The History Of The Law And Economics Movement, Nimrod H. Aviad

Nimrod Haim Aviad

This paper joins a handful of attempts to understand the Law & Economics movement’s success in American legal academia. Adopting an historical perspective, the paper analyzes for the first time the movement’s own stories of success, developed and maintained by the movement’s own members, and considers them as a possible blue-print for success in contemporary legal academia. By following these stories of success, one comes to understand the keen ability of the movement’s economists and lawyer-economists to identify those patterns of academic practice which would eventually grant them the paramount academic capital that they have enjoyed over the last thirty …

Time Well Spent: Congressional Daylight Saving Time Legislation Saves Lives, Not Just Oil, Steve P. Calandrillo

Steve P. Calandrillo

Abstract: Several nations implemented daylight saving time legislation in the last century, including the United States. The United States briefly experimented with year-round daylight saving time twice—during World War II and the energy crises in the 1970s. Agency studies and Congressional hearings from the 1970s show several benefits of year-round daylight saving time, along with potential disadvantages. These studies are dated, and much has changed in the last 30 years. While Congressional efforts to extend daylight saving time in 2007 have again focused on the energy savings this legislation would produce, far more meaningful benefits have been largely ignored. This …

The Uptick Rule Of Short Sale Regulation - Can It Alleviate Downward Price Pressures From Negative Earnings Shocks?, Lynn Bai

Lynn Bai

This paper empirically examines the effect of the uptick rule (including the bid test applicable to NASDAQ stocks) of short sale regulations on stock prices and short selling activities immediately after negative earnings surprises that occurred during the period of May to November 2005. It compares price paths and short selling activities of stocks restricted by the uptick rule with stocks that were exempted from the rule as a result of the SEC’s Pilot Program. The study has not found any evidence that prices of stocks subject to the rule declined at a slower speed than prices of exempted stocks …

Property, Persona, And Publicity, Deven R. Desai

Deven R. Desai

This article focuses on two interconnected problems posed by the growth of online creation. First, unlike analog creations, important digital creations such as emails are mediated and controlled by second parties. Thus although these creations are core intellectual property, they are not treated as such and service providers terminate or deny access to people’s property all the time. In addition, when one dies, some service providers refuse to grant heirs access to this property. The uneven and unclear management of these creations means that historians and society in general will lose access to perhaps the greatest chronicling of human experience …

Is There A Progresssive Alternative To Conservative Welfare Reform?, Philip L. Harvey

Philip L. Harvey

Progressive scholars have been strongly critical of conservative trends in the design and administration of public assistance programs in market societies, but it is far from clear what they would propose instead. Believing that it takes something to replace something, this article assess two different progressive strategies for eliminating poverty and promoting individual freedom that could serve as replacements for existing public assistance regimes. The first proposal is that all members of society be guaranteed an unconditional basic income without imposing any work requirements in exchange for the benefit. Such a benefit could be provided either in the form of …