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Articles 1 - 30 of 70
Full-Text Articles in Law and Economics
For-Profit Managers As Public Fiduciaries: A Neo-Classical Republican Perspective, Rob Atkinson
For-Profit Managers As Public Fiduciaries: A Neo-Classical Republican Perspective, Rob Atkinson
Scholarly Publications
This Article examines the fiduciary duties of for-profit managers in modern liberal society. To arrive at the right "mix" of these duties, it compares the fiduciary duties implied by a standard descriptive model of our society with two competing normative models: Lockean libertarianism on the "right" and neo-classical republicanism on the "left." This comparison shows that all three versions of liberalism, even the one with a Lockean nightwatchman state, require far more extensive duties than we now expect, including a professionalization of management itself. And it shows that the version of liberalism with the most expansive state, neo-classical republicanism, requires …
Placebo Marks, Jake Linford
Placebo Marks, Jake Linford
Scholarly Publications
Scholars often complain that sellers use trademarks to manipulate consumer perception. This manipulation ostensibly harms consumers by limiting their ability to make informed choices. For example, holding other things constant, consumers spend more money on goods with a high-performance reputation. Critics characterize that result as wasteful, if not anticompetitive. But recent marketing research shows that trademarks with a high-performance reputation may sometimes influence perception to the benefit of the consumer.
A trademark with a high-performance reputation can deliver a performance-enhancing placebo effect. Research subjects perform better at physical and mental tasks when they prepare or play with a product bearing …
Digital Surveillance And Preventive Policing, Manuel A. Utset
Digital Surveillance And Preventive Policing, Manuel A. Utset
Scholarly Publications
No abstract provided.
Vicarious Windfalls, Justin Sevier
Vicarious Windfalls, Justin Sevier
Scholarly Publications
The vicarious liability doctrine, which holds third parties responsible for the legal obligations of their duly authorized agents, was designed in part to ensure that tort victims are not undercompensated by insolvent agent wrongdoers. But many legal scholars are highly critical of the doctrine and suggest that fact finders’ systematic biases-particularly with respect to corporate third parties-cause unworthy tort plaintiffs to be overcompensated at the expense of innocent, deep-pocket corporate defendants. These scholars have offered little empirical evidence for these claims and, in fact, behavioral research suggests that their predictions are incorrect.
This Article introduces the concept of the vicarious …
Inefficient Inequality, Shi-Ling Hsu
Inefficient Inequality, Shi-Ling Hsu
Scholarly Publications
For the past several decades, much American lawmaking has been animated by a concern for economic efficiency. At the same time, broad concerns over wealth and income inequality have roiled American politics, and still loom over lawmakers. It can be reasonably argued that a tension exists between efficiency and equality, but that argument has had too much purchase over the past few decades of lawmaking. What has been overlooked is that inequality itself can be allocatively inefficient when it gives rise to collectively inefficient behavior. Worse still, some lawmaking only masquerades as being efficiency-promoting; upon closer inspection, some of this …
Six Degrees Of Graduation: Law And Economics Of Variable Sanctions, Alex Raskolnikov
Six Degrees Of Graduation: Law And Economics Of Variable Sanctions, Alex Raskolnikov
Florida State University Law Review
From parking tickets to tax fines and punitive damages, legal sanctions matter in people’s lives. Yet neither the legal nor the economics literature offers a comprehensive treatment of sanctions. Their practical complexity is not well understood, and their theoretical analysis is fragmented. This Essay addresses both limitations using tax law as a primary example. Sanctions are complex because they vary along at least six different dimensions: aggressiveness, magnitude, culpability, effort to comply, likelihood of detection, and offense history. These six degrees of sanction graduation are distinct, and potentially independent, but often intertwined in obscure and perplexing ways. After clarifying the …
Through The Lens Of Innovation, Mirit Eyal-Cohen
Through The Lens Of Innovation, Mirit Eyal-Cohen
Florida State University Law Review
The legal system constantly follows the footsteps of innovation and attempts to discourage its migration overseas. Yet, present legal rules that inform and explain entrepreneurial circumstances lack a core understanding of the concept of entrepreneurship. By its nature, law imposes order. It provides rules, remedies, and classifications that direct behavior in a consistent manner. Entrepreneurship turns on the contrary. It entails making creative judgments about the unknown. It involves adapting to disarray. It thrives on deviation as opposed to traditional causation. This Article argues that these differences matter. It demonstrates that current laws lock entrepreneurs into inefficient legal routes. Through …
Shareholder Political Primacy, Jay B. Kesten
Shareholder Political Primacy, Jay B. Kesten
Scholarly Publications
Corporate political activity raises an important and diffcult question of corporate law: who decides when the corporation should speak and what it should say? In several cases, the Supreme Court has provided a clear answer: shareholders, acting through the procedures of corporate democracy. While this holding has attracted substantial academic and public criticism, there has been no sustained evaluation (beyond identifying the potential agency costs of corporate political activity) of the possibility that the Supreme Court's appeal to the fraught concept of "corporate democracy," though woefully under-theorized, might be the best allocation of power in the limited context of corporate …
The Moral Hazard Of Contract Drafting, Eric A. Zacks
The Moral Hazard Of Contract Drafting, Eric A. Zacks
Florida State University Law Review
This Article identifies and examines the principal-agent problem as it arises in the context of contract preparation. The economic agency relationship, as it may be understood to exist for contract drafting, provides a superior framework for understanding and reforming the inability of the non-drafting party (the principal) to control the drafting party (the agent). As an economic agent, the drafting party faces a moral hazard when preparing the contract because of the differing interests of the parties as well as the information and control asymmetries that exists. For example, the use of standard form contracts in consumer transactions is an …
Duress As Rent-Seeking, Mark Seidenfeld, Murat C. Mungan
Duress As Rent-Seeking, Mark Seidenfeld, Murat C. Mungan
Scholarly Publications
No abstract provided.
Law And Economic Exploitation In An Anti-Classification Age, Hila Keren
Law And Economic Exploitation In An Anti-Classification Age, Hila Keren
Florida State University Law Review
Does our legal system permit the economic exploitation of extreme vulnerability? Focusing on predatory housing loans—a thriving business at the dawn of the twenty-first century—this Article argues that the answer in most cases is yes. Under an individualistic neoliberal paradigm, borrowers are held liable for their contracts, even if they were targeted with predatory practices. Further, borrowers’ attempts to resort to antidiscrimination law, and frame their exploitation as “reverse redlining,” have offered no real answer. An important yet undertheorized explanation for this problem is the impact of the Supreme Court’s anti-classification jurisprudence on lower courts. In an anti-classification age, even …
Adjudicating Corporate Auctions, Jay B. Kesten
Adjudicating Corporate Auctions, Jay B. Kesten
Scholarly Publications
In light of recent developments in auction theory, this Article re-examines Delaware corporate law governing directors' actions when structuring the sale of a corporation. A foundational doctrine of Delaware law is that when the board of directors resolves to sell a corporation, it must obtain the highest price reasonably available. Auction theory posits that, in certain circumstances germane to corporate takeovers, revenues can be maximized through the use of ex ante precommitments to the rules of the auction. Delaware law, however, does not fully endorse directors' ability to make such precommitments, primarily out of the concern that the board will …
Political Uncertainty And The Market For Ipos, Jay B. Kesten, Murat C. Mungan
Political Uncertainty And The Market For Ipos, Jay B. Kesten, Murat C. Mungan
Scholarly Publications
No abstract provided.
Investments To Make Threats Credible, Rent-Seeking, And Duress, Mark Seidenfeld, Murat C. Mungan
Investments To Make Threats Credible, Rent-Seeking, And Duress, Mark Seidenfeld, Murat C. Mungan
Scholarly Publications
Existing literature on the contract law doctrine of duress identifies a number of tests to determine conditions under which a contract can be voided. No article provides a specific and formal economic analysis on the link between rent-seeking and the conditions under which allowing a defense of duress is wealth enhancing. This article shows that commitments made as a result of ex ante investments by threatening parties made solely for the purpose of transferring, rather than creating wealth, ought to be voidable. We discuss cases in which a test based on rent-seeking enhances efficiency where previously proposed tests do not.
Private Ordering Under Threat Of Regulation, Jake Linford
Private Ordering Under Threat Of Regulation, Jake Linford
Scholarly Publications
No abstract provided.
Public Law At The Cathedral: Enjoining The Government, Michael T. Morley
Public Law At The Cathedral: Enjoining The Government, Michael T. Morley
Scholarly Publications
Conventional wisdom provides that injunctive relief in public law cases is generally unnecessary, because a declaratory judgment and the threat of damages are enough to induce the government to comply with a court’s ruling (except, perhaps, in the institutional reform context). Consistent with this prevailing understanding, most scholars to apply Calabresi and Melamed’s Cathedral framework to public law have concluded that nearly all constitutional rights are protected by property rules, regardless of whether a rightholder actually is protected by an injunction, or instead merely has a substantial likelihood of obtaining one if she goes to court.
This Article challenges this …
A Behavioral Justification For Escalating Punishment Schemes, Murat C. Mungan
A Behavioral Justification For Escalating Punishment Schemes, Murat C. Mungan
Scholarly Publications
The standard two-period law enforcement model is considered in a setting where individuals usually, but not exclusively, commit crimes only after comparing expected costs and benefits. Where escalating punishment schemes are present, there is an inherent value in keeping a clean criminal record; a person with a record may unintentionally become a repeat offender if he fails to exert self-control, and be punished more severely. If the punishment for repeat offenders is sufficiently high, one may rationally forgo the opportunity of committing a profitable crime today to avoid being sanctioned as a repeat offender in the future. Therefore, partial deterrence …
Reverse Payments, Perverse Incentives, Murat C. Mungan
Reverse Payments, Perverse Incentives, Murat C. Mungan
Scholarly Publications
No abstract provided.
Rational Criminal Addictions, Manuel A. Utset
Rational Criminal Addictions, Manuel A. Utset
Scholarly Publications
No abstract provided.
Inchoate Crimes Revisited: A Behavioral Economics Perspective, Manuel A. Utset
Inchoate Crimes Revisited: A Behavioral Economics Perspective, Manuel A. Utset
Scholarly Publications
No abstract provided.
Financial System Engineering, Manuel A. Utset
Financial System Engineering, Manuel A. Utset
Scholarly Publications
No abstract provided.
Response To Comments By Professors Baer, Candeub, Medwed, Painter, And Prentice, Manuel A. Utset
Response To Comments By Professors Baer, Candeub, Medwed, Painter, And Prentice, Manuel A. Utset
Scholarly Publications
No abstract provided.
Corporate Actors, Corporate Crimes And Time-Inconsistent Preference, Manuel A. Utset
Corporate Actors, Corporate Crimes And Time-Inconsistent Preference, Manuel A. Utset
Scholarly Publications
No abstract provided.
Fundraising And Optimal Policy Rules, Murat C. Mungan, Bariş K. Yörük
Fundraising And Optimal Policy Rules, Murat C. Mungan, Bariş K. Yörük
Scholarly Publications
This paper develops a simple spatial model of fundraising, in which charities select a target population to solicit donations. First, we show that in a competitive charity market without any intervention, the number of charities in the market and/or the overall net funds raised by charities may be sub-optimal. Next, we analyze whether a social planner can prevent such shortcomings and show that a regulatory mechanism can be designed to achieve socially desirable outcomes. In contrast to the previous literature, our model does not necessarily produce monopoly as the optimal market structure. We show that if fixed costs associated with …
Re-Focusing On Philanthropy: Revising And Re-Orienting The Standard Model, Rob Atkinson
Re-Focusing On Philanthropy: Revising And Re-Orienting The Standard Model, Rob Atkinson
Scholarly Publications
This paper undertakes a detailed analysis of today's standard theory of the philanthropic sector to provide a new model that is both more accurate in its details and more comprehensive in its scope. The standard theory sees the philanthropic sector as subordinate and supplementary to our capitalist market economy and liberal democratic polity. That approach has a fundamental short-coming: its explanation of both the state and philanthropy as adjuncts to the market fails to appreciate the ways in which all three sectors support and supplement each other. The standard model's primary focus on the market ignores how the demands that …
Don't Say You're Sorry Unless You Mean It: Pricing Apologies To Achieve Credibility, Murat C. Mungan
Don't Say You're Sorry Unless You Mean It: Pricing Apologies To Achieve Credibility, Murat C. Mungan
Scholarly Publications
Remorse and apologies by offenders have not been rigorously analyzed in the law and economics literature. This is perhaps because apologies are regarded as ’cheap talk’ and are deemed to be non-informative of an individual’s conscious state. In this paper, I develop a formal framework in which one can analyze remorse and apologies. I argue that legal procedures can be designed to price apologies, such that only truly remorseful individuals apologize. Hence, apologies would not be mere ’cheap talk’ and could send correct signals regarding an offender’s true conscious state, making them credible. This will lead victims, upon receiving apologies, …
High-Powered (Mis)Incentives And Venture-Capital Contractors, Manuel A. Utset
High-Powered (Mis)Incentives And Venture-Capital Contractors, Manuel A. Utset
Scholarly Publications
No abstract provided.
Economics Of The Independent Invention Defense Under Incomplete Information, Murat C. Mungan
Economics Of The Independent Invention Defense Under Incomplete Information, Murat C. Mungan
Scholarly Publications
Patents lead to ex post deadweight loss arising from a noncompetitive market structure for the invention. Many have argued that introducing independent invention as a defense (IID) to patent infringement can increase social welfare by decreasing such deadweight loss at the price of a modest decrease in the number of inventions. This paper considers the effects of IID in a setting where R&D firms have incomplete information about their rivals. Four main results follow under incomplete information: (i) fewer things are invented under an IID regime; (ii) IID’s effects on welfare are ambiguous; (iii) IID is more likely to increase …
The Law And Economics Of Fluctuating Criminal Tendencies And Incapacitation, Murat C. Mungan
The Law And Economics Of Fluctuating Criminal Tendencies And Incapacitation, Murat C. Mungan
Scholarly Publications
Economic analyses of criminal law are frequently and heavily criticized for being unable to explain many criminal law rules and doctrines people find intuitively just. Existing economic models cannot properly explain, for instance, why criminal law distinguishes between (1) repeat offenders and first-time offenders, (2) murder and voluntary manslaughter, and (3) remorseful and non-remorseful offenders.
This Article proposes a richer economic theory of crime that captures the rationales behind these practices and potentially behind many other important criminal law principles and doctrines. Unlike an overwhelming majority of previous economic analyses, my theory accounts not only for the deterrent effect of …
Welfare Enhancing Regulation Exemptions, Murat C. Mungan
Welfare Enhancing Regulation Exemptions, Murat C. Mungan
Scholarly Publications
Sanctions for regulation violations are used to deter conduct which could potentially result in great social harms. This practice over-deters talented entities and under-deters untalented entities, which leads to social losses. This paper analyzes whether and how such social losses can be mitigated. I show that this can be achieved by allowing regulatees to purchase passes exempting them from regulations at appropriate prices.