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The Meaning Of The Market Myth, Benjamin Means
The Meaning Of The Market Myth, Benjamin Means
Michigan Business & Entrepreneurial Law Review
This Book Review contends that the perfectly rational market may be a myth, not just in the sense of a false or over-simplified account of reality, but also in the deeper, anthropological sense of cultural explanation. Part I describes how rational-market theories were developed by financial economists and applied to Wall Street, sometimes without adequate appreciation for the difference between simplified economic models and real-world behavior. Part II contends that if the rational-market theory has met with acceptance that outstrips its empirical support, the favorable reception may be explained in part by the theory’s congruence with broader normative views about …
The Dog That Didn't Bark: Private Investment Funds And Relational Contracts In The Wake Of The Great Recession, Robert C. Illig
The Dog That Didn't Bark: Private Investment Funds And Relational Contracts In The Wake Of The Great Recession, Robert C. Illig
Michigan Business & Entrepreneurial Law Review
In the aftermath of the subprime mortgage crisis, the contract rights of numerous hedge funds and venture capital funds were breached. These contracts were complex and sophisticated and had been negotiated at great time and expense. Yet despite all of the assumptions of neo-classical contracts theory, nothing happened. Practically none of these injured parties sued to enforce their rights. Professor Illig uses this dearth of litigation to conduct a form of natural experiment as to the value of contract law. Discrete market participants contracted before the crash and then pursued their rights in court afterwards, while relational market participants contracted …