Law and Economics Commons^™

Testing For Adverse Selection In Insurance Markets, Alma Cohen, Peter Siegelman

Peter Siegelman

This paper reviews and evaluates the empirical literature on adverse selection in insurance markets. We focus on empirical work that seeks to test the basic coverage–risk prediction of adverse selection theory—that is, that policyholders who purchase more insurance coverage tend to be riskier. The analysis of this body of work, we argue, indicates that whether such a correlation exists varies across insurance markets and pools of insurance policies. We discuss various reasons why a coverage–risk correlation may not be found in some pools of insurance policies. The presence of a coverage-risk correlation can be explained either by moral hazard or …

The Persistence Of Low Expectations In Special Education Law Viewed Through The Lens Of Therapeutic Jurisprduence, Richard Peterson

Richard Peterson

For more than thirty-five years a paradigm of low expectations has infected efforts to educate children with disabilities and has been a persistent and stubborn obstacle to the successful implementation of the Individuals with Disabilities Education Act (IDEA), and its predecessor, the Education of All Handicapped Children Act (EAHCA). This dilemma raises questions addressed in this paper: What is meant by low expectations in the context of Special Education Law? What are the root causes of this phenomenon, and what makes it so resistant to change? How does it impede implementation of the IDEA? And lastly, in what ways does …

The People's Agents And The Battle To Protect The American Public, Rena Steinzor, Sidney Shapiro

Rena I. Steinzor

Reasonable people disagree about the reach of the federal government, but there is near-universal consensus that it should protect us from such dangers as bacteria-infested food, harmful drugs, toxic pollution, crumbling bridges, and unsafe toys. And yet, the agencies that shoulder these responsibilities are in shambles; if they continue to decline, lives will be lost and natural resources will be squandered. In this timely book, Rena Steinzor and Sidney Shapiro take a hard look at the tangled web of problems that have led to this dire state of affairs.

It turns out that the agencies are not primarily to blame …

Firms As Social Actors, Richard Adelstein

Richard Adelstein

A close look at what firms are and how they act.

Rough Justice, Alexandra Lahav

Alexandra D. Lahav

This Essay offers a new justification for rough justice. Rough justice, as I use the term here, is the attempt to resolve large numbers of cases by using statistical methods to give plaintiffs a justifiable amount of recovery. It replaces the trial, which most consider the ideal process for assigning value to cases. Ordinarily rough justice is justified on utilitarian grounds. But rough justice is not only efficient, it is also fair. In fact, even though individual litigation is often held out as the sine qua non of process, rough justice does a better job at obtaining fair results for …

Tontines For The Invincibles, Tom Baker, Peter Siegelman

Peter Siegelman

No abstract provided.

Law In The Shadow Of Bargaining: The Feedback Effect Of Civil Settlements, Ben Depoorter

Ben Depoorter

Lawmakers, courts, and legal scholars often express concern that settlement agreements withhold important information from the public. This Essay identifies, to the contrary, problematic issues involving the availability of information on non-representative settlements. The theoretical and empirical evidence presented in this Essay demonstrates that, despite the widespread use of nondisclosure agreements, information on settlements is distributed both inside and outside legal communities, reaching actors through various channels including the oral culture in legal communities, specialized reporters, professional interest organizations, and media coverage. Moreover, information on private settlement agreements circulates more widely if the agreed compensation in a given settlement exceeds …

Altruism And Innovation In Health Care, Anupam Bapu Jena, Stéphane Mechoulan, Tomas J. Philipson

Stéphane Mechoulan

The joint presence of technological change and consumption externalities is central to health care industries around the world, because medical innovation drives the expansion of the health care sector and altruism seems to motivate many public subsidies. Although traditional economic analysis has proposed well-known remedies to deal with consumption externalities and inefficient technological change in isolation, it lacks clear principles for addressing them jointly. We argue that standard remedies to each of the two problems are inadequate. Focusing on U.S. health care, we provide illustrative calculations of the dynamic inefficiency in the level of research and development (R&D) spending when …

Setting Aside An Arbitration Award, Fernando Leila

Fernando Leila

I - Facts Most arbitration rules stipulate that the arbitral awards that result from arbitration under those agreements or rules are ‘final.’ Yet there is almost always the possibility for a party to challenge the award, whether or not the parties have agreed. According to the United Nations Commission on International Trade Law (“UNCITRAL”), a successful challenge will usually result in the award being ‘set aside,’ ‘vacated,’ or’ annulled,’ and therefore ceasing to exist, at least within the jurisdiction of the court setting it aside. To set aside an award means to 'declare the award to be disregarded in whole …

When Users Are Authors: Authorship In The Age Of Digital Media, Alina Ng

Alina Ng

This Article explores what authorship and creative production means in the digital age. Notions of the author as the creator of the work provided a point of reference for recognizing ownership rights in literary and artistic works in conventional copyright jurisprudence. The role of the author, as the creator and producer of a work, has been seen as distinct and separate from that of the publisher and user. Copyright laws and customary norms protect the author’s rights in his creation to provide the incentive to create and allow him to appropriate the social value generated by his creativity as recognition …

The Missing Link Of Democracy, Fernando Leila

Fernando Leila

The Missing Link of Democracy: The Federal Reserve Submission to the Democratic Government

“If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, (i.e., the "business cycle") the banks and corporations that will grow up around them will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered.”

Thomas Jefferson

Abstract

This paper examines the shortcomings of the Federal Reserve (the “Fed”) as an institution, its power and policy under a democratic system of government, and the consequences thereof.

America is in …

Harm, Ambiguity, And The Regulation Of Illegal Contracts, Adam B. Badawi

Adam B. Badawi

Prohibitions on contract are a common technique for achieving desired policy outcomes. By deeming certain bargains unlawful or contrary to public policy, judges and other policy actors expect to prevent some of the harm that these contracts can create. The presumptive remedy used to accomplish this goal is non-enforcement—which leaves the parties in the position that courts find them. But the standards that govern whether to impose this stern remedy do not place third-party harm at the forefront of the analysis. Consequently, the current framework can underdeter harmful contracts and overdeter contracts that may be harmless. These effects can be …

Organizations And Economics, Richard Adelstein

Richard Adelstein

A contribution to a symposium on a paper by Richard Posner.

Collective Action Federalism: A General Theory Of Article I, Section 8, Robert D. Cooter, Neil Siegel

Robert Cooter

The Framers of the United States Constitution wrote Article I, Section 8 in order to address some daunting collective action problems facing the young nation. They especially wanted to protect the states from military warfare by foreigners and from commercial warfare against one another. The states acted individually when they needed to act collectively, and Congress lacked power under the Articles of Confederation to address these problems. Section 8 thus authorized Congress to promote the “general Welfare” of the United States by tackling many collective action problems that the states could not solve on their own. Subsequent interpretations of Section …

The Effect Of Representational Gender On Policy Preferences In U.S. Municipalities, Mirya R. Holman

Mirya R Holman

The research presented here explores the effect of gender and gender consciousness on the policy preference of local elected officials. Remedying a gap in the scholarship on women in local office, I examine the attitudes of mayors and council members on a variety of urban policy issues. First positing a gender gap theory of representative attitudes, I find almost no differences in policy preferences between men and women serving in local office. As an alternative, I posit and test a gender consciousness theory of policy preferences. Using open-ended survey data, I find that possessing a gender consciousness has a significant …

Relational Governance And Contract Damages: Evidence From Franchising, Adam B. Badawi

Adam B. Badawi

Regulation By Markets And Higher Education, Benedict Sheehy

Benedict Sheehy

Markets have a number of uses. One increasingly important use by politicians is as a means of regulating the supply and distribution of goods and services formerly supplied and distributed by governments on non-market bases. The use of markets as a regulator of higher education is not novel. However, the increased reliance on markets as a regulator of higher education is an on-going experiment with certain predictable failures. This article explores the uses of the market in the supply and distribution of higher education and weighs it against the stated policy objectives, with particular attention to the application proposed in …

El Procedimiento Administrativo Y Las Facultades De La Autoridad En Materia De Represión De La Competencia Desleal. Apuntes Sobre El Decreto Legislativo N° 1044, Pierino Stucchi

Pierino Stucchi

No abstract provided.

Sex And The City: Female Leaders And Spending On Social Welfare Programs In U.S. Municipalities, Mirya R. Holman

Mirya R Holman

Scholars of urban politics have long argued that cities will shy away from extensive funding of social welfare programs, as fiscal realities make developmental policies far more attractive. Despite the arguments against municipal level funding of social welfare services, cities provide these programs. Why? One possible explanation is that local officials prefer funding welfare programs. The research presented here demonstrates that the gender composition of local elected bodies impacts the provision of welfare services. The presence of a female mayor has a large positive effect on the likelihood a city participates in funding welfare programs and the amount of monetary …

Black Tuesday And Graying The Legitimacy Line For Governmental Intervention: When Tomorrow Is Just A Future Yesterday, Donald J. Kochan

Donald J. Kochan

Black Tuesday in October 1929 marked a major crisis in American history. As we face current economic woes, it is appropriate to recall not only the event but also reflect on how it altered the legal landscape and the change it precipitated in the acceptance of governmental intervention into the marketplace. Perceived or real crises can cause us to dance between free markets and regulatory power. Much like the events of 1929, current financial concerns have led to new, unprecedented governmental intervention into the private sector. This Article seeks caution, on the basis of history, arguing that fear and crisis …