Law Commons^™

Vote For Charity's Sake, Aaron S. Edlin, Andrew Gelman, Noah Kaplan

Aaron Edlin

In a battleground state like Colorado or New Mexico, voting in the presidential election may be equivalent to giving $30,000 - $50,000 to others in expected value, and as such is an extremely efficient form of charity.

The Neoclassical Crisis In U.S. Competition Policy, 1890-1960, Herbert Hovenkamp

Herbert Hovenkamp

ABSTRACT The development of marginalist, or neoclassical, economics led to a fifty-year long crisis in competition policy. Given an industrial structure with sufficient fixed costs, competition always became "ruinous," forcing firms to cut prices to marginal cost without sufficient revenue remaining to pay off investment. Early neoclassicists such as Alfred Marshall were not able to solve this problem. As a result many early twentieth century economists were hostile toward the antitrust laws. The ruinous competition debate came to an abrupt end in the early 1930's, when economists Joan Robinson in Great Britain and particularly Edward Chamberlin in the United States …

Clitoridectomy And The Economics Of Islamic Marriage & Divorce Law, Ryan M. Riegg

Ryan M. Riegg

Statistical String Theory For Courts: If The Data Don't Fit..., David F. Babbel

David F Babbel

The primary purpose of this article is to provide courts with an important new tool for applying the correct probability distribution to a given legal question. This tool is path-breaking and will have an extensive impact on how a wide variety of cases are decided. In areas as diverse as criminal prosecutions and civil lawsuits alleging securities fraud, courts must assess the relevance and reliability of statistical data and the inferences drawn therefrom. But, courts and expert witnesses often make mistaken assumptions about what probability distributions are appropriate for their analyses. Using the wrong probability distribution can lead to invalid …

When Are Law And Economics Isomorphic?, John Cirace

John Cirace

WHEN ARE LAW AND ECONOMICS ISOMORPHIC? ABSTRACT The purpose of this article is twofold: First, to provide a formal statement of legal rationality that is parallel to and can be compared with the standard formal statement of economic rationality. Second, to discuss the conditions under which it is possible to map economic concepts into legal concepts so as to preserve properties and results of operations in both disciplines. In other words, this article answers the question, how are law and economics related to each other? Six examples are discussed.

Complexity As A Catalyst Of Market Failure: A Law And Engineering Inquiry, Steven L. Schwarcz

Steven L Schwarcz

This article examines how the complexities of modern investment securities and the assets underlying them can trigger a breakdown of financial markets and also analyzes what should be done to mitigate the potential for market failure. Because these complexities are characteristic of complexities in nonlinear engineering systems, the article’s analysis draws on the literature analyzing these systems.

Behavioral Public Finance, Edward J. Mccaffery

Edward J McCaffery

These are slides from a presentation to the Gruter Institute for Law and Behavioral Research, Squaw Valley Conference, May, 2008 (at which event Michael Jensen got me to agree to post these slides as a pdf on SSRN . . . ). The task is to give an overview of what I hope to be an emerging field of behavioral public finance. Behavioral finance, as per Barberis and Thaler 2003 (and others), consists of two parts: (1) individual level heuristics and biases, which can lead to sub-optimal (inconsistent) judgment and decision-making, and (2) institutional arbitrage mechanisms. In private finance and …

Comments On Liebman And Zeckhauser, Simple Humans, Complex Insurance, Subtle Subsidies, Edward J. Mccaffery

Edward J McCaffery

These are brief comments on an excellent paper by Jeffrey Liebman and Richard Zeckhauser, prepared for a conference sponsored by the Urban Institute and Brookings on tax and health care policy. Liebman and Zeckhauser summarize the complexities involved in making optimal health insurance decisions, and offer generally cautionary notes about conflating these with tax law (a theme of the conference). Most importantly, Liebman and Zeckhauser suggest a positive role for employers in health care and insurance decisions, as better setters or framers of choice sets—witness 401(k) plans. In this Commentary, I applaud Leibman and Zeckhauser’s general work and particular observation, …

Regulatory Takings: A Real Globalization Of Property Rights?, Críspulo Marmolejo

Críspulo Marmolejo

This text analyzes basic aspects of the doctrine called “Regulatory Takings”, its relationship with Bilateral Investment Treaties, and how both factors have encouraged a global acceptance of this thesis. Property rights and expropriations really imply an analysis of many other issues related to political economy, public policy and how a particular interpretation of property rights affects many countries, especially in Latin America, Middle East, and other developing regions in the world. The current scenario in Latin America is such that there is inequality in the understanding of property rights and the efficiency of its protection. Therefore, countries without a clear …

The New Commerce Clause Doctrine In Game Theoretical Perspective, Maxwell L. Stearns

Maxwell L. Stearns

The Roberts Court emerges at a critical juncture in the development of Commerce Clause doctrine. While the Commerce Clause doctrine implicates concerns for federalism and separation of powers, both of which are rooted in the earliest part of our constitutional history, the new Court presents an ideal opportunity to critically assess existing doctrines and to develop new analytical paradigms. The Rehnquist Court succeeded for the first time in sixty years in imposing substantive limits on the scope of this important source of Congressional power. That Court proved far less successful, however, in developing a coherent normative theory that reconciles the …

How The Government Can Protect Home Mortgage Consumers: A Proposal To Provide Consumers A Risk Assessment Of Mortgages, Adeline Park

Adeline Park

The recent sub-prime mortgage crisis has revealed the consumer’s vulnerability in the home mortgage marketplace. Consumers face an overwhelming variety of mortgage options, and are not motivated to invest the necessary time and resources to comprehend the meaning and implications of each loan feature. I propose that the government assess the risk of each loan feature available in the home mortgage market, based on the historical number of foreclosures each loan type has yielded. The government will then require lenders to display the risk assessment icon on all sales, marketing, and advertising materials. The risk assessment icon will identify the …

Leave Those Orcs Alone: Property Rights In Virtual Worlds, Kevin Deenihan

Kevin E Deenihan

Conversion of property is a familiar piece of law. What about conversion of virtual property? In 2006, a man filed suit claiming theft of virtual real estate he maintained in a Virtual World. The Judge may well have wondered: is this property law? Intellectual property? Torts? Contract? When should the law even apply to Virtual Worlds at all? New societies populated by millions of people have sprung up in the online context. Their inhabitants buy goods, trade with each other, and form complex self-regulating organizations and economic systems. All are activities governed in the real world by centuries of legal …

Comparing Judicial Compensation: Apples, Oranges, And Cherry-Picking, Matthew W. Wolfe, Reed Watson

Matthew W. Wolfe

United States Supreme Court Chief Justice John Roberts describes the American judiciary as the envy of other constitutional democracies. But in one respect, the judiciary apparently trails others: judicial pay. Citing higher salaries of judges in other countries, Chief Justice Roberts and Associate Justices Stephen Breyer and Samuel Alito have all argued that inadequate judicial pay leads to a decline in judicial performance and quality. Judicial pay advocates apparently make these comparisons to emphasize that low judicial salaries “threaten” judicial quality and independence or, alternatively, that high judicial salaries “ensure” quality and independence. But the argument is incomplete, relying upon …

Government Intervention In Emerging Networked Technologies, Erik Lillquist, Sarah E. Waldeck

Erik Lillquist

Some new technologies succeed, while others fail. Networks and multi-sided platforms are an important, but often-overlooked, explanation for these successes and failures. Many technologies will be successful only if their promoters can convince two (or more) sets of heterogeneous users to simultaneously embrace the technology. For example, in the case of credit cards, both consumers and merchants must decide to use the technology. For high definition (HD) televisions, both consumers and broadcasters must adopt the innovation. If only consumers adopted credit cards and HD, but merchants and broadcasters respectively did not, the technologies would fail: with no stores in which …

A Positive Theory Of Eminent Domain, Eric Kades

Eric A. Kades

O Que É Pesquisa Em Direito E Economia?, Bruno Meyerhof Salama

Bruno Meyerhof Salama

No abstract provided.

A "Fair Contracts" Approval Mechanism: Reconciling Consumer Contracts And Conventional Contract Law, Shmuel I. Becher

Shmuel I Becher

Consumer contracts diverge from the traditional paradigm of contract law in various conspicuous ways. They are pre-drafted by one party; they cannot be altered or negotiated; they are executed between unfamiliar contracting parties unequal in their market power and sophistication; they are offered frequently by agents who act on behalf of the seller; and promisees (i.e., consumers) do not read or understand them. Consumer contracts are thus useful in modern markets of mass production, but they cast doubt on some fundamental notions of contract law. To reframe the long-lasting debate over consumer contracts this Article develops a superior legal regime …

Regulation With Placebo Effects, Anup Malani

Anup Malani

There is a growing body of empirical evidence supporting the existence of placebo effects in medical contexts and is suggestive of nontrivial placebo effects in non-medical contexts. This paper reviews the literature on placebo effects, examines the implications for four fields of law (drug approval, informed consent law, consumer protection law, and torts) and suggests future areas for research on placebo effects. Specifically, it make the case for altering the drug approval process to account for, if not credit, placebo effects. It suggests allowing evidence of placebo effects as a defense in cases alleging violations of informed consent or false …

Rpm As An Exclusionary Practice, Ittai Paldor

Ittai Paldor

The existing explanations for resale price maintenance (RPM) are divided along a clear line, separating the pro- and anti- competitive explanations. The anti-competitive explanations suggest that RPM is introduced in furtherance of a cartel either at the retail level or at the manufacturing level. The pro-competitive explanations, by contrast, are all based on the assumption that RPM is designed to benefit a single manufacturer. A key distinction in classifying RPM systems according to the present state of the literature is thus the distinction between single-manufacturer-driven RPM and any other RPM system. This distinction is of major practical importance subsequent to …

Protecting Financial Markets: Lessons From The Subprime Mortgage Meltdown, Steven L. Schwarcz

Steven L Schwarcz

Why did the recent subprime mortgage meltdown undermine financial market stability notwithstanding the protections provided by market norms and financial regulation? This article attempts to answer that question by identifying anomalies and obvious protections that failed to work, and then by examining hypotheses that might explain the anomalies and failures. The resulting explanations provide critical insights into protecting financial markets.

The Petrochina Syndrome: Regulating Capital Markets In The Anti-Globalization Era, Stephen F. Diamond

Stephen F. Diamond

This article argues that the process of globalization has generated a legitimation deficit that can be the source of wasteful, even destructive, social and political conflict. I stylize this outcome as "the PetroChina Syndrome," after a leading example of the kind of activity generated in response to globalization, the PetroChina Campaign, where a coalition of labor, human rights, environmental, anti-slavery and religious groups worked together to oppose the initial public offering of a major Chinese oil company led by Goldman Sachs. The article begins with a discussion of this important but largely unexplored dimension of the anti-globalization era triggered by …

Outgrowing Copyright: The Effect Of Market Size On Copyright Policy, Tom W. Bell

Tom W. Bell

Does copyright protection offer the best means of stimulating the production of expressive works? Perhaps, at the moment, it does. If so, however, copyright protection will probably become inefficiently over-protective as the market for expressive works grows. With such growth, copyright holders will find it increasingly remunerative to focus on customers willing to pay a premium for particular expressive works. In a larger, more finely segmented market, copyright holders will find that their statutory rights generate larger monopoly rents. Yet copyright holders will suffer no corresponding increase in production or distribution costs; thanks to technological advances, we can expect those …

El Proyecto De Ley De Competencia A La Luz Del Análisis Económico Del Derecho, Fernando Castillo Cadena

Fernando Castillo Cadena

No abstract provided.

The Trouble With Stockjobbers: The South Sea Bubble, The Press And The Legislative Regulation Of The Markets, Benedict Sheehy

Benedict Sheehy

Abstract: The South Sea Bubble Act of 1721 is often taken as the first securities legislation. Further it is understood to be a response to a stock market scandal. In fact, the Act was enacted prior to the scandal and indeed the likely cause of the collapse of the stock bubble itself. This article reviews the historical context, including the finance of government of the era, the development of the South Sea Company and its bubble, the legislation, burst and subsequent effects. It places securities legislation in its historical context as part of a broader movement in corporate law, shifting …

The Right To Silence Helps The Innocent: A Response To Critics, Alex Stein

Alex Stein

This contribution to the Cardozo Law Review symposium on the future of the Fifth Amendment responds to the numerous critics of Daniel J. Seidmann & Alex Stein, The Right to Silence Helps the Innocent: A Game-Theoretic Analysis of the Fifth Amendment Privilege, 114 HARV. L. REV. 430 (2000).

Under Seidmann and Stein’s theory, the right to silence protects innocents who find themselves unable to corroborate their self-exonerating accounts by verifiable evidence. Absent the right, guilty criminals would pool with innocents by making false self-exonerating statements. Factfinders would consequently discount the probative value of all uncorroborated exculpatory statements, at the expense …

Torts And Innovation, Alex Stein, Gideon Parchomovsky

Alex Stein

This Essay exposes and analyzes a hitherto overlooked cost of the current design of tort law: its adverse effect on innovation. Tort liability for negligence, defective products, and medical malpractice is determined by reference to custom. We demonstrate that courts’ reliance on custom and conventional technologies as the benchmark of liability chills innovation and distorts its path. Specifically, the recourse to custom taxes innovators and subsidizes replicators of conventional technologies. We explore the causes and consequences of this phenomenon and propose two possible ways to modify tort law in order to make it more welcoming to innovation.

Do Norms Still Matter? The Corrosive Effects Of Globalization On The Vitality Of Norms, Patrick J. Keenan

Patrick J. Keenan

This article considers the ways that the processes of globalization can erode the power of social norms. First, I argue that because individuals in a globalizing community typically suffer from significant disruptions in relationships, the community's ability to regulate itself is eroded. In vibrant communities, residents are willing to intervene in the lives of their neighbors by, for example, scolding children who misbehave in public or teenagers who deface buildings. But in a globalizing community, the conditions that give rise to this willingness to intervene are eroded by the process of globalization. Second, I argue that globalization can distort the …

Quas Primas And The Economic Ordering Of Society For The Social Reign Of Christ The King; A Third Perspective On The Bainbridge/Sargent Law And Economics Debate, Brian M. Mccall

Brian M McCall

How can it be that respected Catholic legal scholars can reach seemingly opposite conclusions about “Law and Economics?” Stephen Bainbridge has argued that both the descriptive and normative aspects of the Law and Economics movement are consistent with and even demanded by the Catholic understanding of the nature of the human person in a fallen world and our historical experience with totalitarian regimes. Mark Sargent, on the other hand, argues that at least the normative, and perhaps aspects of the descriptive, side of Law and Economics are not completely consistent with the nature and purpose of the human being as …

Trying To Vote In Good Conscience, Elizabeth F. Brown

Elizabeth F Brown

This Article analyses the U.S. Conference of Catholic Bishops’ statement, Forming Consciences for Faithful Citizenship: A Call to Political Responsibility from the Catholic Bishops of the United States, and how it addresses the economic and environmental issues raised during the 2008 Presidential election.

Revitalizing Essential Facilities, Spencer Weber Waller, Brett Frischmann

Spencer Weber Waller

Revitalizing Essential Facilities

Spencer Weber Waller

Brett Frischmann

Our article examines an age old debate about the nature and limits of property rights and the current manifestation of this debate in antitrust law. Many areas of law struggle to balance private property rightsCmost importantly, the right of exclusionCwith the public=s right of access to essential resources. What is the best way to manage resources that provide both public and private benefits? For years, academics and law makers have debated this question with respect to transportation systems, communication networks, scientific research, and a variety of other "infrastructural" resources. Many press for …