Law Commons^™

The Nature Of Risk Preferences: Evidence From Insurance Choices, Levon Barseghyan, Francesca Molinari, Joshua C. Teitelbaum, Ted O'Donoghue

Georgetown Law Faculty Publications and Other Works

The authors use data on insurance deductible choices to estimate a structural model of risky choice that incorporates "standard" risk aversion (diminishing marginal utility for wealth) and probability distortions. They find that probability distortions--characterized by substantial overweighting of small probabilities and only mild insensitivity to probability changes--play an important role in explaining the aversion to risk manifested in deductible choices. This finding is robust to allowing for observed and unobserved heterogeneity in preferences. They demonstrate that neither Kőszegi-Rabin loss aversion alone nor Gul disappointment aversion alone can explain our estimated probability distortions, signifying a key role for probability weighting.

Interpretation And Construction In Altering Rules, Gregory Klass

Georgetown Law Faculty Publications and Other Works

This essay is a response to Ian Ayres's, "Regulating Opt-Out: An Economic Theory of Altering Rules," 121 Yale L.J. 2032 (2012). Ayres identifies an important question: How does the law decide when parties have opted-out of a contractual default? Unfortunately, his article tells only half of the story about such altering rules. Ayres cares about rules designed to instruct parties on how to get the terms that they want. By focusing on such rules he ignores altering rules designed instead to interpret the nonlegal meaning of the parties' acts or agreement. This limited vision is characteristic of economic approaches to …

Poverty In America: Why Can't We End It?, Peter B. Edelman

Georgetown Law Faculty Publications and Other Works

The lowest percentage in poverty since we started counting was 11.1 percent in 1973. The rate climbed as high as 15.2 percent in 1983. In 2000, after a spurt of prosperity, it went back down to 11.3 percent, and yet 15 million more people are poor today.

At the same time, we have done a lot that works. From Social Security to food stamps to the earned-income tax credit and on and on, we have enacted programs that now keep 40 million people out of poverty. Poverty would be nearly double what it is now without these measures, according to …

International Financial Standards And The Explanatory Force Of Lex Mercatoria, Cally Jordan

Faculty Papers & Publications

The global financial crisis has cast a strong light on some hitherto obscure corners of the financial world, provoking an outpouring of calls for concerted international action. “Hard law” having disappointed, can “soft law”, in the form of international financial standards, substitute for traditional national legislation. This article examines some of the difficulties associated with the “international standards as soft law” discourse.

First of all, conceptual problems in the “soft law” discourse itself reveal profoundly different patterns of legal thought cutting across national boundaries, resulting in different understandings of international financial standards. Secondly, recent experience, over the past decade, with …

Hard, Soft, And Embedded: Implementing Principles On Promoting Responsible Sovereign Lending And Borrowing, Anna Gelpern

Georgetown Law Faculty Publications and Other Works

This paper, prepared for UNCTAD’s initiative on responsible sovereign lending and borrowing, considers concrete strategies for implementing the Principles. It draws on studies in soft law and new governance, and on the recent experience in promoting best practices in international finance, including project finance, extraction revenue management, foreign aid, sovereign investment, and sovereign borrowing in the capital markets. It recommends maintaining the current non-binding character of the Principles, while embedding implementation in multi-stakeholder arrangements for ongoing disclosure, assessment, interpretation, and adaptation. This strategy has the best chance of changing behavior in sovereign lending and borrowing by creating constituencies for implementation …

Institutionalizing Democracy In Africa: A Comment On The African Charter On Democracy, Elections And Governance, Patrick J. Glen

Georgetown Law Faculty Publications and Other Works

This article provides an exegesis of the recently entered-into-force African Charter on Democracy, Elections and Governance. Democracy has a decidedly mixed history in Africa and, despite a concerted effort by the African Union (AU), it has made only halting inroads in those states that are nondemocratic or struggling to consolidate democracy. That may change as more states ratify and implement the Charter, a comprehensive regional attempt to promote, protect, and consolidate democracy that entered into force in February 2012. This Charter, the culmination of two decades of African thinking on how democracy should develop on the continent, represents the AU’s …

Marketing Pharmaceuticals: A Constitutional Right To Sell Prescriber-Identified Data?, Lawrence O. Gostin

Georgetown Law Faculty Publications and Other Works

Pharmaceutical companies have strong economic interests in influencing physician-prescribing behaviors. They advertise direct-to-the-consumer and to the physician. Beyond general marketing, manufacturers promote their drugs to physicians through “detailing”—sales representatives (“detailers”) visiting medical offices to persuade physicians to prescribe their products.

By law, pharmacies receive specific information with every prescription, including the physician’s name, the drug, and the dose. Pharmacies sell these records to Prescription Drug Intermediaries (data miners), who use advanced computing to analyze prescriber-identified information (which physicians prescribe what drugs, in what dose, and with what prescribing patterns). Data miners, in turn, lease sophisticated reports to pharmaceutical companies to …

Behavioral Approaches To Corporate Law, Donald C. Langevoort

Georgetown Law Faculty Publications and Other Works

This chapter reviews the challenges associated with developing a plausible theory of why psychological "heuristics and biases" might persist in high-stakes business settings. Specific attention is given to issues of loyalty on corporate boards, behavioral finance, and corporate cultures.

Cadbury Twenty Years On, Cally Jordan

Faculty Papers & Publications

This year marks the twentieth anniversary of the publication of the Cadbury Report, one of the most significant events in modern corporate governance. The Cadbury Report, and its simple two page 'best practices', triggered a global debate on corporate governance. 'Cadbury' codes of corporate governance spread like wildfire. The legacy of the Cadbury Report lives on in the UK with no diminution in the appeal of its voluntary code/comply or explain approach to corporate governance. But there are several clouds looming on the horizon. Comply or explain and voluntary codes of corporate governance appear to have run their course elsewhere …

The Hidden Limits Of The Charitable Deduction: An Introduction To Hypersalience, Lilian V. Faulhaber

Georgetown Law Faculty Publications and Other Works

Behavioral economics introduced the concept of salience to law and economics. In the area of tax policy, salience refers to the prominence of taxes in the minds of taxpayers. This article complicates the literature on salience and taxation by introducing the concept of “hypersalience,” which is in many ways the mirror image of hidden taxation. While a revenue-raising tax provision must be hidden for taxpayers to underestimate their tax bill, a revenue-reducing tax provision – such as a deduction, exclusion, or credit – must be more than fully salient for taxpayers to underestimate their tax bill. In other words, the …