Law Commons^™

Reputational Economies Of Scale, Miguel F.P. De Figueiredo, Daniel Klerman

Faculty Articles and Papers

For many years, most scholars have assumed that the strength of reputational incentives is positively correlated with the frequency of repeat play. Firms that sell more products or services were thought more likely to be trustworthy than those that sell less because they have more to lose if consumers decide they have behaved badly. That assumption has been called into question by recent work that shows that, under the standard infinitely repeated game model of reputation, reputational economies of scale will occur only under special conditions, such as monopoly, because larger firms not only have more to lose from behaving …

Does Small Group Health Insurance Deliver Group Benefits: An Argument In Favor Of Allowing The Small Group Market To Die, John Aloysius Cogan, Jr.

Faculty Articles and Papers

The small group health insurance market is failing. Today, fewer than one-third of small firms now offer health insurance and the number of people covered by small group insurance continues to drop. These problems invite the obvious question: What should be done about the small group market? Past scholarship on the small group market has largely focused on documenting the market's problems, evaluating the effectiveness of prior reform efforts, and proposing regulatory changes to stabilize the market. This Article takes a different approach to the small group problem by asking a previously unasked question: Does the small group market deliver …

The Retirement Strategy Of Supreme Court Justices: An Economic Approach, Kayla M. Joyce

Honors Scholar Theses

Previous research has identified strategic behavior in the nomination, confirmation, and retirement processes of the Supreme Court, each independently. This paper analyzes the interaction between the justices, the president, and the Senate in these processes. I constructed a game theoretic model to consider the nomination and approval process of Supreme Court justices and the change in dynamics that might result from an impending election. I hypothesize that sitting justices take into account the party affiliations of the president and the Senate when they are deciding whether it is the optimal time to retire to achieve their own strategic objectives. The …

An Economist Listens To Serial, Peter Siegelman

Faculty Articles and Papers

Virtually nothing about what makes Serial so compelling has much to do with economics. But the central question of the series—the guilt or innocence of Adnan Syed—does connect with a powerful and important branch of economic theory dealing with asymmetries of information, instances where one party knows something the other doesn’t. For example, policyholders may know more about their riskiness than their insurers do; criminal defendants may know more about their guilt or innocence than the state does; and so on. Of course, people often have reasons to conceal or distort their private information, so the challenge posed by so-called …

Information & Equilibrium In Insurance Markets With Big Data, Peter Siegelman

Faculty Articles and Papers

Asymmetric information makes the behavior of insurance markets very difficult to predict. But this Article argues that the increasing use of Big Data by insurers will not result in forecasts of loss that are so accurate that they eliminate uncertainty, and with it, the possibility of insurance. Big Data techniques might lead to a 'flip" in informational asymmetry, resulting in a situation in which insurers know more about their customers than the latter know about themselves. But the effects of such a development could actually be benign. Finally, the Article considers the potential for Big (or at least, More) Data …

In The Name Of The Child: Race, Gender, And Economics In Adoptive Couple V. Baby Girl, Bethany Berger

Faculty Articles and Papers

On June 25, 2013, the Supreme Court decided Adoptive Couple v. Baby Girl, holding that the Indian Child Welfare Act did not permit the Cherokee father in that case to object to termination of his parental rights. The case is ostensibly about a dispute between prospective adoptive parents and a biological father. This Article demonstrates that it is about a lot more than that. It is a microcosm of anxieties about Indianness, race, and the changing nature of parenthood. While made in the name of the child, moreover, the decision supports practices and policies that do not forward and may …

Incentives And Ideology, James Kwak

Faculty Articles and Papers

This is a response to Adam Levitin's article, The Politics of Financial Regulation and the Regulation of Financial Politics: A Review Essay, 127 Harv. L. Rev. 1991 (2014). Levitin discusses various reasons for regulatory capture and highlights several potential solutions that aim to change the political governance of financial regulation. In this response, I highlight the importance of ideology (in this case, the ideology of free financial markets) in producing regulatory outcomes that are good for industry, and therefore the need for solutions that mitigate ideological capture.

Corporate Law Constraints On Political Spending, James Kwak

Faculty Articles and Papers

Corporations currently can participate in electoral politics in the United States through various means: affiliated PACs, super PACs, 501(c)(6) organizations like the Chamber of Commerce, 501(c)(4) social welfare organizations, and traditional 501(c)(3) charitable organizations. Corporate law, as generally interpreted by the courts, places few constraints on the ability of corporate insiders to engage in politics as they choose. I argue that existing statutes and case law could be interpreted to impose greater constraints on corporate political activity. Political contributions should be reviewed as potential violations of the duty of loyalty whenever they could provide personal benefits to board members and …

Public Debt In The United States And Germany: A Constitutional Perspective, Stephen Utz

Faculty Articles and Papers

No abstract provided.

Employees Versus Independent Contractors: Why States Should Not Enact Statutes That Target The Construction Industry, James Kwak

Faculty Articles and Papers

No abstract provided.

Cities, Property, And Positive Externalities, Peter Siegelman, Gideon Parchomovsky

Faculty Articles and Papers

Cities are the locales of numerous interactions that generate externalities-both negative and positive. Although the common law provides a vast array of mechanisms for limiting negative externalities, there is a striking absence of provisions for stimulating the production of positive ones. As a consequence, activities whose social benefits are greater than their private costs are not undertaken, with a resulting efficiency loss.

In this Article, we demonstrate how cities can develop commercial districts that allow for the capture of positive externalities by following the example of suburban malls. In malls, anchor stores provide positive externalities-additional customers-to neighboring stores. Anchors capture …

Labor Law, The Left, And The Lure Of The Market, Michael Fischl

Faculty Articles and Papers

No abstract provided.

Civil Judicial Subsidy, The, Brendan Maher

Faculty Articles and Papers

American society does not require civil litigants to bear the actual cost of using the court; those costs are borne almost entirely by the taxpayer (i.e., the “civil judicial subsidy”). In this Article I ask: is that right? Or is there a more desirable way to apportion court usage costs between the state and litigants? I develop an evaluative framework that facilitates analysis of the purpose, contours, and cost of the current judicial subsidy. We subsidize court use because, in theory, there are certain “social positives” associated with public adjudication. To date the unspoken assumption has been that these social …

Tax Reform In The Aftermath Of The Financial Crisis, Stephen Utz

Faculty Articles and Papers

No abstract provided.

Antitrust Censorship Of Economic Protest, Hillary Greene

Faculty Articles and Papers

Antitrust law accepts the competitive marketplace, its operation, and its outcomes as an ideal. Society itself need not and does not. Although antitrust is not in the business of evaluating, for example, the “fairness” of prices, society can, and frequently does, properly concern itself with these issues. When dissatisfaction results, it may manifest itself in an expressive boycott: a form of social campaign wherein purchasers express their dissatisfaction by collectively refusing to buy. Antitrust should neither participate in nor censor such normative discourse. In this Article, I explain how antitrust law impedes this speech, argue why it should not, and …

Tontines For The Invincibles: Enticing Low Risks Into The Health-Insurance Pool With An Idea From Insurance History And Behavioral Economics, Peter Siegelman, Tom Baker

Faculty Articles and Papers

Over one-third of the uninsured adults in the U.S. below retirement age are between nineteen and twenty-nine years old. Young adults, especially men, often go without insurance, even when buying it is mandatory and sometimes even when it is a low-cost employment benefit. This Article proposes a new form of health insurance targeted at this group, the "young invincibles"-those who (wrongly) believe that they do not need health insurance because they will not get sick. Our proposal offers a cash bonus to those who turn out to be right in their belief that they did not really need health insurance. …

Predictions & Nudges: What Behavioral Economics Has To Offer The Humanities And Vice Versa, Anne Dailey, Peter Siegelman

Faculty Articles and Papers

No abstract provided.

Taxes And The 2008 Us Election, Stephen Utz

Faculty Articles and Papers

No abstract provided.

The Making Of The Post-War Paradigm In American Intellectual Property Law, Steven Wilf

Faculty Articles and Papers

During the New Deal period, intellectual property underwent a transformation. Copyright was recast from literary property to industrial property; trademark shifted from a common law tort of palming off to a regulatory regime for a mass consumer economy, and patent law was rethought to accommodate corporate invention. This essay begins by examining the advantages of looking at intellectual property as deeply situated in New Deal debates over political economy, and calls for a new history of intellectual property very different from conventional narratives moored in the introduction of new technologies. More broadly, it suggests that examining foundational past policy debates, …

Articulating Trade Offs: The Political Economy Of State Action Immunity, Hillary Greene

Faculty Articles and Papers

Antitrust uses economic analysis to assess various trade-offs involving efficiency. Even assuming that a competition matter implicates purely economic matters it can be exceedingly difficult to determine and measure all the relevant factors, assign them proper weights, decide on the appropriate time frames, assess the pertinent interactions, and conduct the trade-off calculations. Not surprisingly, different members of the antitrust community often take vastly differing positions regarding the economic consequences of a particular antitrust doctrine as well as the significance of those consequences. When potentially anti-competitive conduct occurs in the context of state regulation, the challenge to achieving a sensible accommodation …

The Empirical Roots Of The 'Regulatory Reform' Movement: A Critical Appraisal, Richard Parker

Faculty Articles and Papers

Over the past few years the debate over the economic rationality of health, safety and environmental regulation has morphed into a sustained controversy over the tests and methods by which that rationality is judged. Critics have argued that the main regulatory scorecards which comprise much of the empirical foundation for the regulatory reform movement are fundamentally flawed because they: alter agency estimates of future costs and benefits; disregard most uncertainties; and misrepresent ex ante guesses as the costs and benefits of regulation. They also zero out whole categories of benefits that cannot be quantified and/or monetized even when the benefits …

Selling Mayberry: Communities And Individuals In Law And Economics, Peter Siegelman, Gideon Parchomovsky

Faculty Articles and Papers

In an unusual turn of events, American Electric Power Company recently acquired the entire small town of Cheshire, Ohio. The buyout was intended to put an end to a serious pollution problem caused by the company's giant power plant, which was located at the edge of town. Although the plant was worth substantially more than the town, no simple Coasean bargain guided the buyout. This Article combines ethnographic research into the Cheshire buyout with theoretical insights from law and economics to present an empirical and theoretic challenge to the standard account of nuisance disputes. It explores the transaction in detail …

Adverse Selection In Insurance Markets: An Exaggerated Threat, Peter Siegelman

Faculty Articles and Papers

The thesis of this Essay is that although theory demonstrates that adverse selection can occur, and some instances have certainly been documented, neither the theoretical models nor the empirical studies provide much support for its widespread importance in insurance markets. The nature of selection pressures turns out to be vastly more complicated than the rhetoric of courts and academic commentators would suggest. And while the economic theory of adverse selection in insurance markets has become enormously sophisticated, much of it is devoted to rarified analysis of the nature and existence of equilibria. It has thus managed to obscure some essential …

Grading The Government, Richard Parker

Faculty Articles and Papers

For over a decade, scathing critiques of government have been fueled by a group of studies called regulatory scorecards, which purport to show that the costs of many government regulations vastly outweigh their benefits. One widely-cited study by John Morrall, an OMB economist, claims that government regulations cost up to $72 billion per life saved. Another study, co-authored by Bush's regulatory czar, John Graham, claims that over 60,000 people lose their lives each year due to irrational government regulation. A third group of scorecards - compiled by Robert Hahn of the AEI-Brookings Joint Center for Regulatory Studies - claims that …

A New Old Look At Terrorism Insurance: Jack Hirshleifer's War Damage Insurance After Fifty Years, Peter Siegelman

Faculty Articles and Papers

No abstract provided.

The Problem With Scorecards: How (And How Not) To Measure The Cost-Effectiveness Of Economic Sanctions, Richard Parker

Faculty Articles and Papers

No abstract provided.

Hidden Economy Of The Unconscious, The, Anne Dailey

Faculty Articles and Papers

No abstract provided.

On The Cost- Effectiveness Of Economic Sanctions, Richard Parker

Faculty Articles and Papers

For over one hundred years, the attraction of economic sanctions as a middle path between talk and violence has prompted the use of sanctions for a wide variety of purposes ranging from weakening adversaries, toppling governments, and promoting human rights to opening foreign markets, promoting intellectual property, and protecting the global environment.

In recent years, however, economic sanctions have been subjected to stricter scrutiny than ever before, due to a sustained media and lobbying blitz by the U.S. business community under the banner of "USA*Engage." The campaign, begun in 1997, has produced a deluge of newspaper editorials and stories, virtually …

Toward A Taxonomy Of Disputes: New Evidence Through The Prism Of The Priest/Klein Model, Peter Siegelman, Joel Waldfogel

Faculty Articles and Papers

The Priest/Klein model predicts both trial rates and plaintiff win rates as functions of three structural parameters: the decision standard, parties' uncertainty in estimating case quality, and the degree of stake asymmetry across parties. Previous tests of the model are unsatisfactory because most have concentrated on its prediction of a 50 percent win rate, which only obtains as a limiting case. We gather independent evidence that describes the model's three parameters and compare it with estimates from a structural model that simultaneously estimates both trial and win rates. The model fits the data for four of our six case types. …

Allocating Resources Among Prisons And Social Programs In The Battle Against Crime, Peter Siegelman, John J. Donohue Iii

Faculty Articles and Papers

This article evaluates the cost and crime-reducing potential of prisons and social spending, setting forth the conditions under which a shift in resources from an expanding prison population into social spending would lead to a reduction in total crime. Preschool enrichment programs coupled with family intervention have generated impressive results in reducing crime in a number of different studies. Targeting of resources toward those children most at risk of criminal behavior is necessary to generate cost-effective crime reduction, but this may be difficult to achieve because of political or constitutional constraints. Given precise targeting, and if a broadly implemented preschool …