Law Commons^™

The Psychological Foundations Of Behavioral Law And Economics, Jeffrey J. Rachlinski

Cornell Law Faculty Publications

Over the past decade, psychological research has enjoyed a rapidly expanding influence on legal scholarship. This expansion has established a new field—“Behavioral Law and Economics” (BLE). BLE’s principal insight is that human behavior commonly deviates from the predictions of rational choice theory in the marketplace, the election booth, and the courtroom. Because these deviations are predictable, and often harmful, legal rules can be crafted to reduce their undesirable influence. Ironically, BLE seldom recognizes that its intellectual origins lie with psychology more so than economics. This failure leaves BLE open to criticisms that can be answered only by embracing the underlying …

The Origins, Nature, And Promise Of Empirical Legal Studies And A Response To Concerns, Theodore Eisenberg

Cornell Law Faculty Publications

This Article describes the origins of three movements in legal academia: empirical legal studies (ELS), law and society, and law and economics. It then quantifies the distribution across scholarly fields (for example, economics and psychology) of authors in these movements’ journals and reports the impact of the movements’ scholarly journals. By focusing on two leading law and economics journals, this Article also explores the effect of a journal being centered in law schools rather than in a social science discipline. It suggests that ELS has achieved rapid growth and impact within the academic legal community because of (1) its association …

An Empirical Analysis Of Empirical Legal Scholarship Production, 1990-2009, Michael R. Heise

Cornell Law Faculty Publications

Inspired by the retirement of Professor Tom Ulen of the University of Illinois, the author considers the growth and development of empirical legal scholarship over two decades—a period of time that corresponds, not coincidentally, with Professor Ulen’s career. Starting in the 1990s when empirical scholarship had not yet “caught on,” the author first documents the increase in quantity of empirical scholarship over two decades. Next, the author applies a law and economics perspective to the recent surge in empirical scholarship, explaining that the trend has been fueled by an increase in the number of empirically trained scholars and also by …

Why Adr Programs Aren’T More Appealing: An Empirical Perspective, Michael Heise

Cornell Law Faculty Publications

Standard law and economic theory suggests that litigating parties seeking to maximize welfare will participate in alternative dispute resolution (ADR) programs if they generate a surplus. ADR programs claim to generate social surplus partly through promoting settlements and reducing case disposition time. Although most associate ADR programs with trial courts, a relatively recent trend involves appellate court use of ADR programs. The emergence of court-annexed ADR programs raises a question. Specifically, if ADR programs achieve their goals of promoting settlements and reducing disposition time, why do some courts find it necessary to impose ADR participation? Attention to ADR’s ability to …

Reframing Financial Regulation, Charles K. Whitehead

Cornell Law Faculty Publications

Financial regulation today is largely framed by traditional business categories. The financial markets, however, have begun to bypass those categories, principally over the last thirty years. Chief among the changes has been convergence in the products and services offered by traditional intermediaries and new market entrants, as well as a shift in capital-raising and risk-bearing from traditional intermediation to the capital markets. The result has been the reintroduction of old problems addressed by (but now beyond the reach of) current regulation, and the rise of new problems that reflect change in how capital and financial risk can now be managed …

Land Virtues, Eduardo M. Peñalver

Cornell Law Faculty Publications

This article has two goals. First, I explore some of the descriptive and normative shortcomings of traditional law and economics discussions of the ownership and use of land. These market-centered approaches struggle in different ways with features of land that distinguish it from other "commodities." The complexity of land - its intrinsic complexity, but even more importantly the complex ways in which human beings interact with it - undermines the notion that owners will focus on a single value, such as wealth, in making decisions about their land. Adding to the equation land's "memory," by which I mean the combined …

Bailouts, Buy-Ins, And Ballyhoo, Robert C. Hockett

Cornell Law Faculty Publications

The bailout strategy now being pursued by Treasury under the recently authorized Troubled Asset Relief Plan, if “strategy” it can be called, remains obscure and erratic at best. All the while markets remain jittery and credit remains tight, as the underlying source of our present financial jitters—continued decline in the housing market and still mounting foreclosures—goes unaddressed. This piece proposes an interesting and novel approach to solving the financial problem. If it works out, it would eventually minimize the cost to the government.

What The New Treasury Must Do, Robert C. Hockett

Cornell Law Faculty Publications

After a number of heady false starts, against the backdrop of threatened financial catastrophe, Congress and the White House enacted a stopgap financial “bailout”plan early in October 2008. From that point onward the “plan” has repeatedly morphed, morphed again, and morphed back through a string of remarkably fleeting guises. One suspects this dynamic will continue, at least for a while, as a new president and Congress find their footing in the first half of 2009.

Why Paretians Can’T Prescribe: Preferences, Principles, And Imperatives In Law And Policy, Robert C. Hockett

Cornell Law Faculty Publications

Recent years have witnessed two linked revivals in the legal academy. The first is renewed interest in articulating a normative “master principle” by which legal rules might be evaluated. The second is renewed interest in the prospect that a variant of Benthamite “utility” might serve as the requisite touchstone. One influential such variant now in circulation is what the Article calls “Paretian welfarism.”

This Article rejects Paretian welfarism and advocates an alternative it calls “fair welfare.” It does so because Paretian welfarism is inconsistent with ethical, social, and legal prescription, while fair welfare is what we have been groping for …

Bringing It All Back Home: How To Save Main Street, Ignore K Street, And Thereby Save Wall Street, Robert C. Hockett

Cornell Law Faculty Publications

No abstract provided.

Warranties And Disclaimers In The Electronic Age, Robert A. Hillman, Ibrahim Barakat

Cornell Law Faculty Publications

This paper reports on software-licensor express warranty and disclaimer practices on the Internet. Our data show that virtually all of the websites and End User License Agreements (EULAs) we sampled include express warranties on the website and disclaimers of the warranties in the EULAs that may erase all or much of the quality protection. Next, the paper reviews the reasons why consumers generally do not read their e-standard forms despite the prevalence of disclaimers and other adverse terms. We then argue that e-commerce exacerbates the problem of warranties and disclaimers and that lawmakers should address this issue. We contend that …

Human Persons, Human Rights, And The Distributive Structure Of Global Justice, Robert C. Hockett

Cornell Law Faculty Publications

It is common for economically oriented transnational legal theorists to think and communicate mainly in maximizing terms. It is less common for them to notice that each time we speak explicitly of maximizing one thing, we speak implicitly of distributing another thing and equalizing yet another thing. Moreover, we effectively define ourselves and our fellow humans by reference to that which we equalize. For it is in virtue of the latter that our global welfare formulations treat us as "counting" for purposes of globally aggregating and maximizing.

To analyze maximization language on the one hand, and equalization and identification language …

Insource The Shareholding Of Outsourced Employees: A Global Stock Ownership Plan, Robert C. Hockett

Cornell Law Faculty Publications

With the American economy stalled and another federal election campaign season well underway, the “outsourcing” of American jobs is again on the public agenda. Latest figures indicate not only that claims for joblessness benefits are up, but also that the rate of American job-exportation has more than doubled since the last electoral cycle. This year’s political candidates have been quick to take note. In consequence, more than at any time since the early 1990s, continued American participation in the World Trade Organization, in the North American Free Trade Agreement, and in the processes of global economic integration more generally appear …

Transdisciplinary Conflict Of Laws Foreword: Cavers's Double Legacy, Karen Knop, Ralf Michaels, Annelise Riles

Cornell Law Faculty Publications

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Reflective Intensions: Two Foundational Decision-Points In Mathematics, Law, And Economics, Robert C. Hockett

Cornell Law Faculty Publications

This Article, transcribed from a symposium talk given by the author, examines two critical junctures at which foundational decisions must be made in three areas of theoretical inquiry - mathematics, law, and economics. The first such juncture is that which the Article labels the "arbitrary versus criterial choice" juncture. This is the decision point at which one must select between what is typically called an "algorithmic," "principled," "law-like," or "intensionalist" understanding of those concepts which figure foundationally in the discipline in question on the one hand, and a "randomized," "combinatorial," or "extensionalist" such understanding on the other hand.

The second …

How The International Financial Institutions Can Help To Win Globalization Of More Stakeholders - By Making More Stockholders, Robert C. Hockett

Cornell Law Faculty Publications

No abstract provided.

The Impossibility Of A Prescriptive Paretian, Robert C. Hockett

Cornell Law Faculty Publications

Most normatively oriented economists appear to be “welfarist” and Paretian to one degree or another: They deem responsiveness to individual preferences, and satisfaction of one or more of the Pareto criteria, to be a desirable attribute of any social welfare function. I show that no strictly “welfarist” or Paretian social welfare function can be normatively prescriptive. Economists who prescribe must embrace at least one value apart from or additional to “welfarism” and Paretianism, and in fact will do best to dispense with Pareto entirely.

What Kinds Of Stock Ownership Plans Should There Be? Of Esops, Other Sops And "Ownership Societies", Robert C. Hockett

Cornell Law Faculty Publications

Present-day advocates of an ownership society (OS) do not seem to have noticed the means we have already employed to become an OS where homes and human capital (higher education) are concerned. Nor do they appear to have considered whether these same means - which amount to publicly enhanced private credit markets - might be employed to spread shares in business firms, with a view to completing our OS. This article, the third in a series, seeks tentatively to fill that gap. It does so first by demonstrating how the Employee Stock Ownership Plan, or ESOP, in effect replicates our …

Economic Emergency And The Rule Of Law, Bernadette Meyler

Cornell Law Faculty Publications

Academic work extolling the merits of the "rule of law" both domestically and internationally abounds today, yet the meanings of the phrase itself seem to proliferate. Two of the most prominent contexts in which rule of law rhetoric appears are those of economic development and states of emergency. In the area of private law, dissemination of the rule of law across the globe and, in particular, among emerging market countries is often deemed a prerequisite for enhancing economic development, partly because it ensures that foreign investments will not be summarily expropriated and that contractual rights will not be frustrated by …

Why (Only) Esops?, Robert C. Hockett

Cornell Law Faculty Publications

No abstract provided.

Discounting, On Stilts, Douglas A. Kysar

Cornell Law Faculty Publications

This paper provides a critical overview of several articles presented at the Intergenerational Discounting and Intergenerational Equity Conference held at the University of Chicago Law School on April 27-28, 2006. First, it demonstrates that conventional normative justifications offered for the use of discounting future costs and benefits for policy analysis in the intergenerational context do not withstand scrutiny. Second, it observes that the compensatory transfers that are sometimes thought to sanitize the cost-benefit procedure in the intergenerational context are deeply problematic, both in their theoretical construction and in their practical adequacy for the tasks they are being deployed to accomplish. …

Specific Investment: Explaining Anomalies In Corporate Law, Margaret M. Blair, Lynn A. Stout

Cornell Law Faculty Publications

This Article has two goals: to praise Professor Robert Clark as a remarkable corporate scholar, and to explore how his work has helped to advance our understanding of corporations and corporate law. Clark wrote his classic treatise at a time when corporate scholarship was dominated by a principal-agent paradigm that viewed shareholders as the principals or sole residual claimants in public corporations and treated directors as shareholders' agents. This view naturally led contemporary scholars to believe that the chief economic problem of interest in corporate law was the "agency cost" problem of getting corporate directors to do what shareholders wanted …

Share Price As A Poor Criterion For Good Corporate Law, Lynn A. Stout

Cornell Law Faculty Publications

Academics, reformers, and business leaders all yearn for a single, objective, easy-to-read measure of corporate performance that can be used to judge the quality of public corporation law and practice. This collective desire is so powerful that it has led many commentators to grab onto the first marginally plausible candidate: share price.

Contemporary economic and corporate theory, as well as recent business history, nevertheless warn us against unthinking acceptance of share price as a measure of corporate performance. This Essay offers a brief reminder of some of the many reasons why stock prices often fail to reflect true corporate performance, …

Economic Rationality Vs. Ethical Reasonableness: The Relevance Of Law And Economics For Legal Ethics, W. Bradley Wendel

Cornell Law Faculty Publications

No abstract provided.

Labor And Finance As Inevitably Transnational: Globalization Demands A Sophisticated And Transnational Lens, Katherine V.W. Stone, Timothy A. Canova, Claire Moore Dickerson

Cornell Law Faculty Publications

No abstract provided.

From "Mission-Creep" To Gestalt-Switch: Justice, Finance, The Ifis, And The Intended Beneficiaries Of Globalization, Robert C. Hockett

Cornell Law Faculty Publications

No abstract provided.

Ethnography In The Realm Of The Pragmatic: Studying Pragmatism In Law And Politics, Annelise Riles

Cornell Law Faculty Publications

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The Uncertain Psychological Case For Paternalism, Jeffrey J. Rachlinski

Cornell Law Faculty Publications

The Democratization Process And Structural Adjustment In Africa, Muna Ndulo

Cornell Law Faculty Publications

No abstract provided.

On The Proper Motives Of Corporate Directors (Or, Why You Don't Want To Invite Homo Economicus To Join Your Board), Lynn A. Stout

Cornell Law Faculty Publications

One of the most important questions in corporate governance is how directors of public corporations can be motivated to serve the interests of the firm. Directors frequently hold only small stakes in the companies they manage. Moreover, a variety of legal rules and contractual arrangements insulate them from liability for business failures. Why then should we expect them to do a good job?

Conventional corporate scholarship has great difficulty wrestling with this question, in large part because conventional scholarship usually adopts the economist's assumption that directors are rational actors motivated purely by self-interest. This homo economicus model of behavior may …