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Full-Text Articles in Law
Rationality's Reach, Adam B. Badawi
Rationality's Reach, Adam B. Badawi
Michigan Law Review
Economic analysis and the rational actor model have dominated contracts scholarship for at least a generation. In the past fifteen years or so, however, a group of behaviorists has challenged the ability of the rational choice model to account for consumer behavior. These behaviorists are not trying to dismantle the entire enterprise. They generally accept the fundamentals of economic analysis but argue that the rational actor model can be improved by incorporating evidence of decisionmaking flaws that people exhibit. Oren Bar-Gill has been one of the foremost and influential proponents of a behaviorist take on contracts, and his recent book, …
Comparative Effectiveness Research As Choice Architecture: The Behavioral Law And Economics Solution To The Health Care Cost Crisis, Russell Korobkin
Comparative Effectiveness Research As Choice Architecture: The Behavioral Law And Economics Solution To The Health Care Cost Crisis, Russell Korobkin
Michigan Law Review
With the Patient Protection and Affordable Care Act (“ACA”) set to dramatically increase access to medical care, the problem of rising costs will move center stage in health law and policy discussions. “Consumer directed health care” proposals, which provide patients with financial incentives to equate marginal costs and benefits of care at the point of treatment, demand more decisionmaking ability from consumers than is plausible due to bounded rationality. Proposals that seek to change the incentives of health care providers threaten to create conflicts of interest between doctors and patients. New approaches are desperately needed. This Article proposes a government-facilitated …
The Debt Dilemma, Katherine Porter
The Debt Dilemma, Katherine Porter
Michigan Law Review
Part I describes the nature of credit card spending and explores the usefulness of Mann's comparative approach to studying credit cards. Part II evaluates Mann's findings on the overall relationships between individual credit card transactions and aggregate levels of spending, borrowing, and bankruptcy. It also briefly analyzes the relationship between his findings and policy recommendations. Part III explores data on families who refrain from credit card use and struggle with serious financial distress. Part IV revisits Mann's policy recommendations in light of this new data. I conclude that implementing credit card reform would offer families only partial, albeit valuable, protection …
Brand New Deal: The Branding Effect Of Corporate Deal Structures, Victor Fleischer
Brand New Deal: The Branding Effect Of Corporate Deal Structures, Victor Fleischer
Michigan Law Review
Consider the unusual legal structures of the following four deals: When Google went public in 2004, it used an Internet auction to sell its stock to shareholders. When Ben & Jerry's went public in 1984, it sold its stock only to Vermont residents. Steve Jobs's contract with Apple entitles him to an annual cash salary of exactly one dollar. Stanley Works, a Connecticut toolmaker, considered reincorporating in Bermuda to reduce its tax liability. Under public pressure, it changed its mind and remains legally incorporated in Connecticut. What do these deals have in common? In each case, the legal infrastructure of …
One-Sided Contracts In Competitive Consumer Markets, Lucian A. Bebchuk, Richard A. Posner
One-Sided Contracts In Competitive Consumer Markets, Lucian A. Bebchuk, Richard A. Posner
Michigan Law Review
The usual assumption in economic analysis of law is that in a competitive market without informational asymmetries, the terms of contracts between sellers and buyers will be optimal-that is, that any deviation from these terms would impose expected costs on one party that exceed benefits to the other. But could there be cases in which "one-sided" contracts containing terms that impose a greater expected cost on one side than benefit on the other-would be found in competitive markets even in the absence of fraud, prohibitive information costs, or other market imperfections? That is the possibility we explore in this Article.
Workable Antitrust Policy, Frank H. Easterbrook
Workable Antitrust Policy, Frank H. Easterbrook
Michigan Law Review
One of the schools of thought in the economics of antitrust was called "workable competition." The adherents to this school believed that markets were prone to cartelization and that concentration was death on competition, but that occasionally competition might prove "workable." These scholars were suspicious of almost every industrial practice they saw. One of the manifestations of their work came to be known as the "structure-conduct-performance paradigm." The thesis was that you could tell whether competition was feasible from the structure of the market. If the top four firms had fifty percent or so of the sales, we should abandon …
Consumer Beware Chicago, Eleanor M. Fox
Consumer Beware Chicago, Eleanor M. Fox
Michigan Law Review
Professor Hovenkamp's article, Antitrust Policy After Chicago, reveals an important truth. Chicago School economics does not provide a superior roadmap to efficiency. I would take the critique one step further and assert: The main gap between Chicago and its critics is not even the design of the roadmap to efficiency. The main gap is social and political philosophy.
Rhetoric And Skepticism In Antitrust Argument, Herbert Hovenkamp
Rhetoric And Skepticism In Antitrust Argument, Herbert Hovenkamp
Michigan Law Review
In his essay on Workable Antitrust Policy Judge Easterbrook professes an extraordinary skepticism about economic models in general, and particularly about the ability of courts to use economic models to distinguish the competitive from the anticompetitive. But a profession of skepticism is itself a very powerful rhetorical device; it creates a perception of tough-mindedness, of refusal to yield real-world observations to analytic models or other abstractions, of extreme reluctance to accept any proposition that has not been clearly proven. Further, it is always very easy to be a skeptic, because every position ever taken except perhaps for a few tautologies …