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Full-Text Articles in Law

Politics And The Business Corporation, Robert H. Sitkoff Dec 2003

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 of ...


Dying To Get Out Of Debt: Consumer Insolvency Law And Suicide In Japan, Mark West Dec 2003

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 ...


Employment Market Institutions And Japanese Working Hours, Mark West Dec 2003

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 ...


Valuation Averaging: A New Procedure For Resolving Valuation Disputes, Keith Sharfman Dec 2003

Valuation Averaging: A New Procedure For Resolving Valuation Disputes, Keith Sharfman

Rutgers Law School (Newark) Faculty Papers

In this Article, Professor Sharfman addresses the problem of "discretionary valuation": that courts resolve valuation disputes arbitrarily and unpredictably, thus harming litigants and society. As a solution, he proposes the enactment of "valuation averaging," a new procedure for resolving valuation disputes modeled on the algorithmic valuation processes often agreed to by sophisticated private firms in advance of any dispute. He argues that by replacing the discretion of judges and juries with a mechanical valuation process, valuation averaging would cause litigants to introduce more plausible and conciliatory valuations into evidence and thereby reduce the cost of valuation litigation and increase the ...


Trust Law, Corporate Law, And Capital Market Efficiency, Robert H. Sitkoff Nov 2003

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 essay is ...


Measuring Recovery For Non-Contractual Investment, Omri Ben-Shahar, Robert A. Mikos Sep 2003

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 ...


What Counts As Fraud? An Empirical Study Of Motions To Dismiss Under The Private Securities Litigation Reform Act, Adam C. Pritchard, Hillary Sale Sep 2003

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 ...


An Agency Costs Theory Of Trust Law, Robert H. Sitkoff Sep 2003

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 ...


Roundtable: Recent Developments In Section 2, Aaron S. Edlin Aug 2003

Roundtable: Recent Developments In Section 2, Aaron S. Edlin

Aaron Edlin

No abstract provided.


Following The Man On The Clapham Omnibus: Social Science Evidence In Malpractice Litigation, Richard O. Lempert Jul 2003

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 Jun 2003

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 that the ...


Against Preemption: How Federalism Can Improve The National Legislative Process, Roderick Hills May 2003

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 May 2003

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 ...


Optimal Penalties In Contracts, Aaron S. Edlin, Alan Schwartz Apr 2003

Optimal Penalties In Contracts, Aaron S. Edlin, Alan Schwartz

Aaron Edlin

Reviews the literature on breach of contract and contract penalties and presents in a coherent framework. Critiques the grounds on which courts validate liquidated damage provisions or invalidate penalties.


The Economic Ambiguity (And Possible Irrelevance) Of Tax Transition Rules, Eric D. Chason Apr 2003

The Economic Ambiguity (And Possible Irrelevance) Of Tax Transition Rules, Eric D. Chason

Faculty Publications

No abstract provided.


La Deuda Política, Ramón Antonio Morales Quintanilla Feb 2003

La Deuda Política, Ramón Antonio Morales Quintanilla

Ramón Antonio Morales Quintanilla

No abstract provided.


La Ilegalidad De Las Multas De Tránsito, Ramón Antonio Morales Quintanilla Jan 2003

La Ilegalidad De Las Multas De Tránsito, Ramón Antonio Morales Quintanilla

Ramón Antonio Morales Quintanilla

No abstract provided.


Behavioral Economics And The Sec, Stephen Choi, Adam C. Pritchard Jan 2003

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 ...


The Uses Of History In Law And Economics, Ron Harris Jan 2003

The Uses Of History In Law And Economics, Ron Harris

Ron Harris

During the last quarter of the twentieth century, the humanities and social sciences have turned toward history, something that culminated in the 1990s, and this phenomenon was evident in law as well. However, until recently, law and economics, the most influential post-World War II jurisprudential movement, was historical in its methodology and research agenda. The first objective of this article is to call attention to this neglected characteristic of law and economics and to explain its causes by analyzing its intellectual origins, its methodological causes, and the nature of its interaction with other sub-fields of law and of economics. The ...


A Two-Dimensional Framework For Analyzing Property Rights Regimes, Shi-Ling Hsu Jan 2003

A Two-Dimensional Framework For Analyzing Property Rights Regimes, Shi-Ling Hsu

Shi-Ling Hsu

This article proposes an integrative framework wherein all property regimes can be expressed as a function of two fundamental characteristics: (i) whether the dominant right is a use right or an exclusion right (or some degree thereof), and (ii) the size of the party jointly holding the dominant right. This article will show how all property regimes can be characterized by these two variables. By analyzing property regimes in such a framework, property regimes can be related to each other, and conditions can be identified under which the regimes function best. I introduce four fundamental property regimes: the Individual Use ...


La Falaz Leyenda De Robin Hood. Los Dilemas Económicos Y Filosóficos De La Redistribución De La Riqueza, Enrique Pasquel, Gerardo Solís Jan 2003

La Falaz Leyenda De Robin Hood. Los Dilemas Económicos Y Filosóficos De La Redistribución De La Riqueza, Enrique Pasquel, Gerardo Solís

Enrique Pasquel

Todos los gobiernos dicen tomar del rico para darle al pobre. Muchos aceptan que esta es una función legítima del gobierno. Pero redistribuir la riqueza es economicamente perjudicial, daña a los pobres que intenta proteger y carece de un fundamento filosófico.


¿QuiéN Dijo Que En Salem Hubo Brujas? La Privatización Del Servicio De Justicia: Rompiendo El Mito De La Justicia Estatal, Enrique Pasquel, Andrés Bayly Jan 2003

¿QuiéN Dijo Que En Salem Hubo Brujas? La Privatización Del Servicio De Justicia: Rompiendo El Mito De La Justicia Estatal, Enrique Pasquel, Andrés Bayly

Enrique Pasquel

El servicio de justicia no tiene que ser un monopolio estatal. Buena parte de él podría trasladarse al sector privado, que tiene mejores incentivos para brindar justicia de mayor calidad.


De La Razón De Estado A La Razón De Mercado, José Antonio Lozano Díez Jan 2003

De La Razón De Estado A La Razón De Mercado, José Antonio Lozano Díez

José Antonio Lozano Díez

No abstract provided.


Pain-And-Suffering Damages In Tort Law: Revisiting The Theoretical Framework And The Empirical Evidence, Ronen Avraham Jan 2003

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 ...


Evaluating The Risks Of Market Swaps, Maurice Stucke Dec 2002

Evaluating The Risks Of Market Swaps, Maurice Stucke

Maurice E Stucke

An asset swap between two competitors can be (i) per se illegal under Section 1 of the Sherman Act or (ii) a potentially legitimate sale of assets under Section 7 of the Clayton Act.

The case law and antitrust commentary vary as to which standard should be applied, and the implication can be significant for the business entities contemplating the deal. This article outlines five factors to assist in evaluating the asset swap's legality under the federal antitrust laws, and the critical determination of which standard to apply to a potentially high risk transaction.


Indeterminate Causation And Apportionment Of Damages, Alex Stein, Ariel Porat Dec 2002

Indeterminate Causation And Apportionment Of Damages, Alex Stein, Ariel Porat

Alex Stein

This Article analyzes the problem of indeterminate causation in torts and develops a system of compensating plaintiffs that responds to both optimal deterrence and corrective justice criteria. Under this system, the plaintiff’s award should equal her harm multiplied by the ex post probability of causation. Any other system, including that of recovery for lost chances that many courts have adopted, would either under-compensate or over-compensate the plaintiff. The Article’s approach is presently recommended by the Third Restatement of Torts.

This Article derives from the general theory developed in my book with Ariel Porat, Tort Liability under Uncertainty (Oxford ...