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Full-Text Articles in Law
Throwing Good Money After Bad? Board Connections And Conflicts In Bank Lending, Philip E. Strahan, Randall S. Kroszner
Throwing Good Money After Bad? Board Connections And Conflicts In Bank Lending, Philip E. Strahan, Randall S. Kroszner
Coase-Sandor Working Paper Series in Law and Economics
This paper investigates the frequency of connections between banks and non-financial firms through board linkages and whether those connections affect lending and borrowing behavior. Although a board linkages may reduce the costs of information flows between the lender and borrower, a board linkage may generate pressure for special treatment of a borrower not normally justifiable on economic grounds. To address this issue, we first document that banks are heavily involved in the corporate governance network through frequent board linkages. Banks tend to have larger boards with a higher proportion of outside directors than non- financial firms, and bank officer-directors tend …
Probability Neglect: Emotions, Worst Cases, And Law, Cass R. Sunstein
Probability Neglect: Emotions, Worst Cases, And Law, Cass R. Sunstein
Coase-Sandor Working Paper Series in Law and Economics
When strong emotions are triggered by a risk, people show a remarkable tendency to neglect a small probability that the risk will actually come to fruition. Experimental evidence, involving electric shocks and arsenic, supports this claim, as does real-world evidence, involving responses to abandoned hazardous waste dumps, the pesticide Alar, and anthrax. The resulting “probability neglect” has many implications for law and policy. It suggests the need for institutional constraints on policies based on ungrounded fears; it also shows how government might effectively draw attention to risks that warrant special concern. Probability neglect helps to explain the enactment of certain …
Covenants Not To Compete From An Incomplete Contracts Perspective, George Triantis, Eric A. Posner
Covenants Not To Compete From An Incomplete Contracts Perspective, George Triantis, Eric A. Posner
Coase-Sandor Working Paper Series in Law and Economics
No abstract provided.
The Allocation Of The Commons: Parking And Stopping On The Commons, Richard A. Epstein
The Allocation Of The Commons: Parking And Stopping On The Commons, Richard A. Epstein
Coase-Sandor Working Paper Series in Law and Economics
The economic forces governing transitions between different property rights regimes has been the source of extensive study since Demsetz's path breaking 1967 essay, "Toward a Theory of Property Rights." This paper offers first a general critique of that position, chiefly on the ground that it underestimates the practical difficulties of orchestrating efficient transitions in contexts where strong political forces are at play. Thereafter, the paper explores the movement among various systems that are used to allocate a particular public good, namely parking places on public streets. It examines both bottom-up systems that rely on analogues to the rule of first …
The Arithmetic Of Arsenic, Cass R. Sunstein
The Arithmetic Of Arsenic, Cass R. Sunstein
Coase-Sandor Working Paper Series in Law and Economics
What does cost-benefit mean, or do, in actual practice? When agencies are engaging in cost-benefit balancing, what are the interactions among law, science, and economics? This Article attempts to answer that question by exploring, in some detail, the controversy over EPA’s proposed regulation of arsenic in drinking water. The largest finding is that science often can produce only “benefit ranges,” and wide ones at that. With reasonable assumptions based on the existing science data, the proposed arsenic regulation can be projected to save as few as 0 lives and as many as 112. With reasonable assumptions, the monetized benefits of …
The Political Economy Of Property Exemption Laws, Eric A. Posner, Richard M. Hynes, Anup Malani
The Political Economy Of Property Exemption Laws, Eric A. Posner, Richard M. Hynes, Anup Malani
Coase-Sandor Working Paper Series in Law and Economics
No abstract provided.
Courts Should Not Enforce Government Contracts, Eric A. Posner
Courts Should Not Enforce Government Contracts, Eric A. Posner
Coase-Sandor Working Paper Series in Law and Economics
Most scholars believe that courts should enforce government contracts, though they disagree about the extent to which liability or damages rules should trade off relevant considerations – the problem of governments holding up contractors, on the one hand, and the problem of governments using contracts in order to defer costs to future governments, on the other hand. These scholars, however, overestimate the ability of courts to affect policy outcomes. Courts cannot increase the welfare of current or future generations by enforcing government contracts. The reason is that enforcing contracts can benefit future generations only by increasing the credibility of their …
In And Out Of Public Solution: The Hidden Perils Of Property Transfer, Richard A. Epstein
In And Out Of Public Solution: The Hidden Perils Of Property Transfer, Richard A. Epstein
Coase-Sandor Working Paper Series in Law and Economics
No abstract provided.
Predictably Incoherent Judgments, Cass R. Sunstein, Daniel Kahneman, David Schkade, Ilana Ritov
Predictably Incoherent Judgments, Cass R. Sunstein, Daniel Kahneman, David Schkade, Ilana Ritov
Coase-Sandor Working Paper Series in Law and Economics
When people make moral or legal judgments in isolation, they produce a pattern of outcomes that they would themselves reject, if only they could see that pattern as a whole. A major reason is that human thinking is category-bound. When people see a case in isolation, they spontaneously compare it to other cases that are mainly drawn from the same category of harms. When people are required to compare cases that involve different kinds of harms, judgments that appear sensible when the problems are considered separately often appear incoherent and arbitrary in the broader context. Another major source of incoherence …
Pursuing A Remedy In Microsoft: The Declining Need For Centralized Coordination In A Networked World, Randal C. Picker
Pursuing A Remedy In Microsoft: The Declining Need For Centralized Coordination In A Networked World, Randal C. Picker
Coase-Sandor Working Paper Series in Law and Economics
No abstract provided.
Social And Economic Rights? Lessons From South Africa, Cass R. Sunstein
Social And Economic Rights? Lessons From South Africa, Cass R. Sunstein
Coase-Sandor Working Paper Series in Law and Economics
No abstract provided.
The Laws Of Fear, Cass R. Sunstein
The Laws Of Fear, Cass R. Sunstein
Coase-Sandor Working Paper Series in Law and Economics
Cognitive and social psychologists have uncovered a number of features of ordinary thinking about risk. Giving particular attention to the work of Paul Slovic, this review-essay explores how an understanding of human cognition bears on law and public policy. The basic conclusion is that people make many mistakes in thinking about risk and that sensible policies, and sensible law, will follow statistical evidence, not ordinary people. The discussion explores the use of heuristics, the effects of cascades, the role of emotions, demographic differences, the role of trust, and the possibility that ordinary people have a special “rationality” distinct from that …
The Market For Federal Judicial Law Clerks, Alvin E. Roth, Richard A. Posner, Christopher Avery, Christine Jolls
The Market For Federal Judicial Law Clerks, Alvin E. Roth, Richard A. Posner, Christopher Avery, Christine Jolls
Coase-Sandor Working Paper Series in Law and Economics
In September 1998, the Judicial Conference of the United States abandoned its latest attempt to regulate the timing of interviews and offers in the law clerk selection process. This paper surveys the further unraveling of the market since then, makes comparisons with other entry level professional labor markets, and evaluates some possibilities for reform.
Bankruptcy Decision Making, Edward Morrison, Douglas G. Baird
Bankruptcy Decision Making, Edward Morrison, Douglas G. Baird
Coase-Sandor Working Paper Series in Law and Economics
When a firm encounters financial distress, there is a significant possibility that, at some point, the firm itself should be shut down and its assets put to a better use. But Chapter 11 and indeed all market-mimicking reorganization regimes other than a speedy auction entrust the shutdown decision to a bankruptcy judge who lacks information and expertise, as well as the ability to control the timing of her decisions. Understanding the costs of entrusting the shutdown decision to a bankruptcy judge is central to assessing any law of corporate reorganizations. This paper models the shutdown decision as the exercise of …
Regulating Risks After Ata, Cass R. Sunstein
Regulating Risks After Ata, Cass R. Sunstein
Coase-Sandor Working Paper Series in Law and Economics
Whitman v. American Trucking Association was one of the most eagerly awaited regulatory decisions in many years. But the Court’s understated, steady, lawyerly opinion was a bit of an anticlimax, representing a return to normalcy and leaving many open questions. The Court was correct to say that the relevant provision of the Clean Air Act forbids consideration of cost; it was also correct to refuse to invoke the nondelegation doctrine. Importantly, the Court left in place a set of important lower court decisions, allowing agencies to consider costs unless Congress expressly concludes otherwise. The Court also raised some new questions …
Ten Truths About Tax Shelters, David A. Weisbach
Ten Truths About Tax Shelters, David A. Weisbach
Coase-Sandor Working Paper Series in Law and Economics
This paper advances ten propositions about tax shelters and tax avoidance. The first four propositions argue that tax shelters must be analyzed solely by the consequences of shelters and the responses, rejecting reasoning based on notions such as the right to tax plan, legitimate tax planning, or statutory interpretation. The next three propositions analyze the consequences of tax shelters by viewing shelters as unintentional gaps in the tax base and attacks on shelters as similar to broadening the base. At the margin, the benefits of broadening the base must be set equal to the administrative costs of doing so and …
What Has The Visual Arts Rights Act Of 1990 Accomplished?, William M. Landes
What Has The Visual Arts Rights Act Of 1990 Accomplished?, William M. Landes
Coase-Sandor Working Paper Series in Law and Economics
This paper presents an economic analysis of the Visual Arts Rights Act of 1990 (VARA) which provides attribution and integrity rights, commonly called moral rights, for defined types of artistic works. The paper shows that these laws may actually harm artists by adding contracting and transaction costs in the art market. For most works, these costs will be trivial because collectors have a strong self-interest in preserving the works in good condition. These costs are likely to be significant, however, for works subject to destruction or alteration in the future, such as sitespecific works and works installed in buildings, because …
Control Rights, Priority Rights, And The Conceptual Foundations Of Corporate Reorganizations, Robert K. Rasmussen, Douglas G. Baird
Control Rights, Priority Rights, And The Conceptual Foundations Of Corporate Reorganizations, Robert K. Rasmussen, Douglas G. Baird
Coase-Sandor Working Paper Series in Law and Economics
No abstract provided.
Controlling Agencies With Cost-Benefit Analysis: A Positive Political Theory Perspective, Eric A. Posner
Controlling Agencies With Cost-Benefit Analysis: A Positive Political Theory Perspective, Eric A. Posner
Coase-Sandor Working Paper Series in Law and Economics
Cost-benefit analysis is analyzed using a model of agency delegation. In this model an agency observes the state of the world and issues a regulation, which the president may approve or reject. Cost-benefit analysis enables the president to observe the state of the world (in one version of the model), or is a signal that an agency may issue (in another version). The roles of the courts, Congress, and interest groups are also considered. It is argued that the introduction of cost-benefit analysis increases the amount of regulation, including the amount of regulation that fails cost-benefit analysis; that the president …
Does Bogart Still Get Scale? Rights Of Publicity In The Digital Age, Douglas G. Baird
Does Bogart Still Get Scale? Rights Of Publicity In The Digital Age, Douglas G. Baird
Coase-Sandor Working Paper Series in Law and Economics
No abstract provided.
Academic Fads And Fashions (With Special Reference To Law), Cass R. Sunstein
Academic Fads And Fashions (With Special Reference To Law), Cass R. Sunstein
Coase-Sandor Working Paper Series in Law and Economics
Like everyone else, academics are susceptible to informational and reputational signals. Sometimes academics lack confidence in their methods and beliefs, and they pay a great deal of attention to the methods and beliefs of others. The academic study of law is particularly subject to cascade effects, as people follow signals that they participate in amplifying. Some of these effects run their course quickly, whereas others last a long time. Leaders can play a special role in starting and stopping cascades; external shocks play a special role in the academic study of law; sometimes like-minded people within academia move one another …
Statutory Foreign Affairs Preemption, Jack L. Goldsmith
Statutory Foreign Affairs Preemption, Jack L. Goldsmith
Coase-Sandor Working Paper Series in Law and Economics
No abstract provided.
The Law And Economics Of Consumer Finance, Eric A. Posner, Richard M. Hynes
The Law And Economics Of Consumer Finance, Eric A. Posner, Richard M. Hynes
Coase-Sandor Working Paper Series in Law and Economics
This survey of the law and economics of consumer finance discusses economic models of consumer lending, and evaluates the major consumer finance laws in light of them. We focus on usury laws, restrictions on creditor remedies such as the ban on expansive security interests, bankruptcy law, limitations on third-party defenses such as the holder in due course doctrine, information disclosure rules including the Truth in Lending Act, and anti-discrimination law. We also discuss the empirical literature.
Switching The Default Rule, Cass R. Sunstein
Switching The Default Rule, Cass R. Sunstein
Coase-Sandor Working Paper Series in Law and Economics
There is a standard analysis of default rules in contract law, including those forms of contract law that fall under the label of employment law. But behavioral economics raises many complications. The default rule can create an endowment effect, making employees value certain rights more simply because they have been granted such rights in the first instance. Similarly, the default rule for savings plans, set by employers or law, seems to have a large effect on employee behavior. When the default rule affects preferences and behavior, conventional economic analysis seems indeterminate; either default rule can be efficient. In employment law, …
Financial Contract Design In The World Of Venture Captial, George Triantis
Financial Contract Design In The World Of Venture Captial, George Triantis
Coase-Sandor Working Paper Series in Law and Economics
No abstract provided.
Private Commercial Law In The Cotton Industry: Creating Cooperation Through Rules, Norms, And Institutions, Lisa Bernstein
Private Commercial Law In The Cotton Industry: Creating Cooperation Through Rules, Norms, And Institutions, Lisa Bernstein
Coase-Sandor Working Paper Series in Law and Economics
No abstract provided.