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Full-Text Articles in Law
Politics And The Business Corporation, Robert H. Sitkoff
Politics And The Business Corporation, Robert H. Sitkoff
Law & Economics Working Papers Archive: 2003-2009
This essay explores the policy bases for, and the political economy of, the law's long-standing regulation of corporate political speech. The essay has three parts. First, it contends that the conventional justifications for regulating corporate interventions in politics -- that corporate donations unnaturally skew the political discourse (bad politics) and that corporate political donations harm shareholders (agency costs) -- assume irrational investors and substantial capital market inefficiency. Drawing on public choice theory, the essay also explores the aim of retarding rent-seeking as an alternative justification for regulating corporate interventions in politics. Second, the essay reexamines the history of the regulation …
Dying To Get Out Of Debt: Consumer Insolvency Law And Suicide In Japan, Mark West
Dying To Get Out Of Debt: Consumer Insolvency Law And Suicide In Japan, Mark West
Law & Economics Working Papers Archive: 2003-2009
This Article explores the complex relation between consumer insolvency law and suicide in Japan, where bankruptcies and suicides have increased dramatically in recent years. The statistical and interview evidence, some of which relates to the creation of a relatively efficient and socially acceptable insolvency mechanism in 2001, suggests that law is at least indirectly relevant to decisions to take one’s own life. Law can bring about debt control and stigma mitigation, each of which can lead to lower levels of stress and depression, each of which can lead to lower suicide rates. Still, responses to the law, even in relatively …
Employment Market Institutions And Japanese Working Hours, Mark West
Employment Market Institutions And Japanese Working Hours, Mark West
Law & Economics Working Papers Archive: 2003-2009
Why do Japanese workers work such long hours? Beginning with a series of cases in the 1950s, Japanese courts drastically curtailed firms’ abilities to dismiss workers. As a consequence of the inability to dismiss workers legally, large Japanese firms hired a smaller number of workers than were necessary to fulfill capacity without overtime. Employers rely on the working hours of this undersized cadre of workers, carefully screened to rule out the slothful, as a buffer. In bad times, the size of the work force makes dismissal unnecessary. In good times, workers are forced to work long hours. While these court …
Trust Law, Corporate Law, And Capital Market Efficiency, Robert H. Sitkoff
Trust Law, Corporate Law, And Capital Market Efficiency, Robert H. Sitkoff
Law & Economics Working Papers Archive: 2003-2009
In both the publicly-traded corporation and the private donative trust a crucial task is to minimize the agency costs that arise from the separation of risk-bearing and management. But where the law of corporate governance evolved in the shadow of capital-market checks on agency costs, trust governance did not. Thus, even more than that of close corporations, the law and study of private trusts offers an illuminating counterfactual -- a control, as it were - for a playful thought experiment about the importance of capital market efficiency to the law and study of public corporations. The animating idea for this …
Measuring Recovery For Non-Contractual Investment, Omri Ben-Shahar, Robert A. Mikos
Measuring Recovery For Non-Contractual Investment, Omri Ben-Shahar, Robert A. Mikos
Law & Economics Working Papers Archive: 2003-2009
Parties who make investments that generate externalities may sometimes recover from the beneficiaries, even in the absence of contract. Previous scholarship has shown that granting recovery, based on either the cost of the investment or the benefit it confers, can provide optimal incentives to invest. However, this article demonstrates that the law often awards recovery that is neither purely cost-based, nor purely benefit-based, and instead equals either the greater-of or lesser-of the two measures. These hybrid approaches to recovery distort incentives to invest. The article demonstrates the prevalence of these practices, and explores informational and related reasons why they emerge. …
An Agency Costs Theory Of Trust Law, Robert H. Sitkoff
An Agency Costs Theory Of Trust Law, Robert H. Sitkoff
Law & Economics Working Papers Archive: 2003-2009
This Article develops an agency costs theory of the law of private trusts, focusing chiefly on donative trusts. The agency costs approach offers fresh insights into recurring problems in trust law including, among others, modification and termination, settlor standing, fiduciary litigation, trust-investment law and the duty of impartiality, trustee removal, the role of so-called trust "protectors," and spendthrift trusts. The normative claim is that the law of trusts should minimize the agency costs inherent in locating managerial authority with the trustee and the residual claim with the beneficiaries, but only to the extent that doing so is consistent with the …
What Counts As Fraud? An Empirical Study Of Motions To Dismiss Under The Private Securities Litigation Reform Act, Adam C. Pritchard, Hillary Sale
What Counts As Fraud? An Empirical Study Of Motions To Dismiss Under The Private Securities Litigation Reform Act, Adam C. Pritchard, Hillary Sale
Law & Economics Working Papers Archive: 2003-2009
This article presents the findings of a study of the resolution of motions to dismiss securities fraud lawsuits since the passage of the Private Securities Litigation Reform Act in 1995. Our sample consists of decisions on motions to dismiss in securities class actions by district and appellate courts in the Second and Ninth Circuits for cases filed after the passage of the Reform Act to the end of 2002. These circuits are the leading circuits for the filing of securities class actions and are generally recognized as representing two ends of the securities class action spectrum. Post-PSLRA, the Second Circuit …
Following The Man On The Clapham Omnibus: Social Science Evidence In Malpractice Litigation, Richard O. Lempert
Following The Man On The Clapham Omnibus: Social Science Evidence In Malpractice Litigation, Richard O. Lempert
Law & Economics Working Papers Archive: 2003-2009
This article responds to proposals to admit statistical evidence from empirical studies of actual health care practices to prove prevailing health practice standards in malpractice litigation by arguing that the case for doing so has numerous weaknesses that advocates of admitting such data commonly ignore. A fundamental concern is that the standard of practice defense co-evolved with prevailing modes of proof and might have been different had proof through experts not allowed for an aspirational as well as an empirical element to reach the jury. The article also argues that generating reliable statistical evidence of standard medical practice can be …
Legal Transitions, Rational Expectations, And Legal Progress, Kyle D. Logue
Legal Transitions, Rational Expectations, And Legal Progress, Kyle D. Logue
Law & Economics Working Papers Archive: 2003-2009
This paper was written for a symposium on legal transitions. The central question in the transitions literature is whether or to what extent the government should provide compensation for (or seek in some way to ameliorate) the losses of wealth occasioned by unexpected changes in the law or social policy. This Article argues that the prevailing normative framework for evaluating legal transitions - the consequentialist or economic framework - relies critically on two assumptions: the assumption that private parties (whose incentives are sought to be affected by the choice of transition norm) will behave with rational expectations and the assumption …
Against Preemption: How Federalism Can Improve The National Legislative Process, Roderick Hills
Against Preemption: How Federalism Can Improve The National Legislative Process, Roderick Hills
Law & Economics Working Papers Archive: 2003-2009
How easily should courts infer that federal statutes preempt state law? An ongoing debate exists on the question in Congress and among scholars and judges. One side calls for judges to protect federalism by adopting a rule of statutory construction that would bar preemption absent a clear statement of preemptive intent. Opponents argue against such a "clear statement" rule by arguing that state control over preemptable topics is often presumptively inefficient, because common-law juries lack expertise and because states are prone to imposing external costs on their neighbors. This article sidesteps these debates over preemption and instead argues that, quite …
Insuring Against Terrorism And Crime, Saul Levmore, Kyle D. Logue
Insuring Against Terrorism And Crime, Saul Levmore, Kyle D. Logue
Law & Economics Working Papers Archive: 2003-2009
The attacks of September 11th produced staggering losses of life and property. They also brought forth substantial private insurance payouts, as well as federal relief for the City of New York and for the families of individuals who perished on that day. The losses suffered in and after the attacks, and the structure of the relief effort, have raised questions about the availability of insurance against terrorism, the role of government in providing for, subsidizing, or ensuring the presence of such insurance, and the interaction between relief and the incentives for future precaution taking. In response to such losses, and …
Behavioral Economics And The Sec, Stephen Choi, Adam C. Pritchard
Behavioral Economics And The Sec, Stephen Choi, Adam C. Pritchard
Law & Economics Working Papers Archive: 2003-2009
Investors face myriad investment alternatives and seemingly limitless information concerning those alternatives.Not surprisingly, many commentators contend that investors frequently fall short of the ideal investor posited by the rational actor model. Investors are plagued with a variety of behavioral biases (such as, among others, the hindsight bias, the availability bias, loss aversion, and overconfidence). Even securities market institutions and intermediaries may suffer from biases, led astray by groupthink and overconfidence. The question remains whether regulators should focus on such biases in formulating policy. An omnipotent regulatory decisionmaker would certainly improve on flawed investor decisionmaking. The alternative we face, however, is …
Pain-And-Suffering Damages In Tort Law: Revisiting The Theoretical Framework And The Empirical Evidence, Ronen Avraham
Pain-And-Suffering Damages In Tort Law: Revisiting The Theoretical Framework And The Empirical Evidence, Ronen Avraham
Law & Economics Working Papers Archive: 2003-2009
Should there be pain-and-suffering damages in tort law? Most legal economists who wrote on the subject that there should not be pain-and-suffering damages in tort law. A minority of scholars thought the decision of whether tort law should provide pain-and-suffering damages is an empirical, or an experimental, question that cannot be armchair-theorized. Yet, all scholars who have done empirical or experimental work to explore the desirability of pain-and-suffering damages reached the conclusion that it is undesirable. In this paper I argue that the majority view cannot serve as a policy-making aid. I side with the minority of scholars who argue …