Law and Economics Commons^™

Resistance Is Not Futile: Challenging Aapi Hate, Peter H. Huang

William & Mary Journal of Race, Gender, and Social Justice

This Article analyzes how to challenge AAPI (Asian American Pacific Islander) hate—defined as explicit negative bias in racial beliefs towards AAPIs. In economics, beliefs are subjective probabilities over possible outcomes. Traditional neoclassical economics view beliefs as inputs to making decisions with more accurate beliefs having indirect, instrumental value by improving decision-making. This Article utilizes novel economic theories about belief-based utility, which economically captures the intuitive notion that people can derive pleasure and pain directly from their and other people’s beliefs. Even false beliefs can offer comfort and reassurance to people. This Article also draws on interdisciplinary and multidisciplinary theories …

Regulatory Competition And State Capacity, Martin W. Sybblis

William & Mary Business Law Review

This Article explores an underlying tension in the regulatory competition literature regarding why some jurisdictions are more attractive to firms than others. It pays special attention to offshore financial centers (OFCs). OFCs court the business of nonresidents, offer business friendly regulatory environments, and provide for minimal, if any, taxation on their customers. On the one extreme, OFCs are theorized as merely products of legislative capture— thereby lacking any meaningful agency of their own. On the other hand, OFCs are conceptualized as well-governed jurisdictions that attract investment because of the high quality of their laws and legal institutions—indicating some ability to …

Marginal Benefits Of The Core Securities Laws, Kevin S. Haeberle

Faculty Publications

To every thing there is a season. In the area of securities regulation in the United States, it is the season for expansion. This article shows why such expansion should not involve use of the core issuer disclosure, fraud, and insider trading laws to reduce information asymmetry in the stock market in the name of investor protection. I argue that any expansion of these laws focused on this secondary market should therefore be justified by distinct concerns (namely, efficiency ones). Moreover, any push to better serve and protect investors should be focused on other areas of securities law (such as …

Public Or Private Venture Capital?, Darian M. Ibrahim

Faculty Publications

The United States has an unparalled entrepreneurial ecosystem. Silicon Valley startups commercialize cutting-edge science, create plentiful jobs, and spur economic growth. Without angel investors and venture capital funds (VCs) willing to gamble on these high-risk, high-tech companies, none of this would be possible.

From a law-and-economics perspective, startup investing is incredibly risky. Information asymmetry and agency costs abound. In the United States, angels and VCs successfully mitigate these problems through private ordering and informal means. Countries without the robust private venture capital system that exists in the United States have attempted to fund startups publicly by creating junior stock exchanges …

Boost: Improving Mindfulness, Thinking, And Diversity, Peter H. Huang

William & Mary Business Law Review

Many important decisions can be difficult; require focused, cognitive attention; produce delayed, noisy feedback; benefit from careful and clear thinking; and quite often trigger anxiety, stress, and other strong, negative emotions. Much empirical, experimental, and field research finds that we often make decisions leading to outcomes we judge as suboptimal. These studies have contributed to the popularity of the idea of nudging people to achieve better outcomes by changing how choices and information are framed and presented (also known as choice architecture and information architecture). Although choice architecture and information architecture can nudge people into better outcomes, choice architecture and …

Public Or Private Venture Capital?, Darian M. Ibrahim

Popular Media

No abstract provided.

The Faulty Law And Economics Of The “Baseball Rule”, Nathaniel Grow, Zachary Flagel

William & Mary Law Review

This Article examines the so-called “Baseball Rule,” the legal doctrine generally immunizing professional baseball teams from liability when spectators are hit by errant balls or bats leaving the field of play. Following a recent series of high-profile fan injuries at Major League Baseball (MLB) games, this century-old legal doctrine has come under increased scrutiny, with both academic and media commentators calling for its abolition. Nevertheless, despite these criticisms, courts have almost uniformly continued to apply the Baseball Rule to spectator-injury lawsuits.

This Article offers two contributions to the ongoing debate surrounding the Baseball Rule. First, it provides new empirical evidence …

Contemporary Sunday Hunting Laws: Unnecessary Economic Roadblocks, Ripe For Repeal, Seamus Ovitt

William & Mary Environmental Law and Policy Review

In America, Sunday closing laws, laws restricting what activities individuals could engage in, date back to the early colonial period; those early laws, like much of North American jurisprudence, trace their roots to the laws that existed in England at the time. Historically, however, laws restricting the behavior of individuals, specifically on Sundays, date back thousands of years; initially, their language was tied directly to that of the Old Testament. As God declared:

[s]ix days shalt thou labour, and do all thy work: But the seventh day [is] the Sabbath of the Lord thy God: [in it] thou shalt not …

A 2016 Copa America Bump For Major League Soccer? Strengthening The Case For Legal Action Arising From The Corrupted 2022 World Cup Bid, Jeff Todd, R. Todd Jewell

William & Mary Business Law Review

Governmental and private investigations have generated evidence of corruption in the bidding process to host the 2022 FIFA World Cup, which went to Qatar rather than the United States. One economic study has shown an increase in professional soccer attendance in European countries that host the World Cup and the European Championships. Accordingly, Major League Soccer and its investor-operators could pursue tort and unfair competition claims to argue that denial of a 2022 World Cup USA will result in lowered attendance, and thus lost profits and diminished business value. Key differences in American and European soccer leagues and sports markets …

Mutuals: An Area Of Legal Climate Change, Karl T. Muth, Andrew Leventhal

William & Mary Business Law Review

Underappreciated in its importance and often-misunderstood in its implications, the choice between a company limited by shares and a company organized as a mutual is an important decision in sectors ranging from agriculture to banking to insurance. Adding gravity to this particular decision is the difficulty and enormous cost of corporate metamorphosis between company types later in the company’s life. The authors examine the history of the mutual form, its popularity’s rise and fall during the twentieth century, and its advantages and disadvantages in today’s environment.

How Well Do We Treat Each Other In Contract?, Aditi Bagchi

William & Mary Business Law Review

One of the important contributions of Nathan Oman’s new book is to draw focus onto the quality of the relationships enabled by contract. He claims that contract, by supporting markets, cultivates certain virtues; helps facilitate cooperation among people with diverse commitments; and produces the wealth that may fuel interpersonal and social justice. These claims are all plausible, though subject to individual challenge. However, there is an alternative story to tell about the kinds of relationships that arise from markets--i.e., a story about domination. The experience of domination is driven in part by the necessity, inequality, and competition enjoined by markets, …

Contract Law And The Common Good, Brian H. Bix

William & Mary Business Law Review

In The Dignity of Commerce, Nathan Oman offers a theory of contract law that is largely descriptive, but also strongly normative. His theory presents contract law’s purpose as supporting robust markets. This Article compares and contrasts Oman’s argument about the proper understanding of contract law with one presented over eighty years earlier by Morris Cohen. Oman’s focus is on the connection between Contract Law and markets; Cohen’s connection had been between Contract Law and the public interest. Oman’s work brings back Cohen’s basic insight, and gives it a more concrete form, as a formidable normative theory with detailed prescriptions.

Contract, Promise, And The Right Of Redress, Andrew S. Gold

William & Mary Business Law Review

This Essay reviews Nathan Oman’s recent book, The Dignity of Commerce. The book is compelling, and it makes an important and original contribution to contract theory—a contribution that insightfully shows how markets matter. Yet, in the course of developing a market-centered justification for contract law, The Dignity of Commerce also downplays the significance of consent and promissory morality. In both cases, the book’s argument is problematic, but this Essay will address questions of promissory morality. Oman contends that promise-based accounts struggle with contract law’s bilateralism and with its private standing doctrine. Yet, promissory morality is a very good fit …

A Pragmatist’S View Of Promissory Law With A Focus On Consent And Reliance, Robert A. Hillman

William & Mary Business Law Review

This Article discusses Professor Nate Oman’s excellent new book, The Dignity of Commerce, which makes an impressive case for how markets can produce “desirable” outcomes for society. In addition to a comprehensive account of what he calls “virtues” of markets, such as their tendency to produce cooperation, trust, and wealth, the book is full of useful and persuasive supporting information and discussions.

Oman is not only a fan of markets, but he asserts that markets are the “center” of contract theory, and provide its normative foundation. Elaborating, Oman concludes that “contract law exists primarily to support markets” and that …

Does Contract Law Need Morality?, Kimberly D. Krawiec, Wenhao Liu

William & Mary Business Law Review

In The Dignity of Commerce, Nathan Oman sets out an ambitious market theory of contract, which he argues is a superior normative foundation for contract law than either the moralist or economic justifications that currently dominate contract theory. In doing so, he sets out a robust defense of commerce and the marketplace as contributing to human flourishing that is a refreshing and welcome contribution in an era of market alarmism. But the market theory ultimately falls short as either a normative or prescriptive theory of contract. The extent to which law, public policy, and theory should account for values …

Markets And Morals: The Limits Of Doux Commerce, Mark L. Movsesian

William & Mary Business Law Review

In this Essay on Professor Oman’s beautifully written and meticulously researched book, The Dignity of Commerce, I do three things. First, I describe what I take to be the central message of the book, namely, that markets promote liberal values of tolerance, pluralism, and cooperation among rival, even hostile groups. Second, I show how Oman’s argument draws from a line of political and economic thought that dates to the Enlightenment, the so-called doux commerce thesis of thinkers like Montesquieu and Adam Smith. Finally, I discuss what I consider the most penetrating criticism of that thesis, Edmund Burke’s critique from …

Commerce, Religion, And The Rule Of Law, Nathan B. Oman

Faculty Publications

The rule of law and religion can act as commercial substitutes. Both can create the trust required for material prosperity. The rule of law simplifies social interactions, turning people into formal legal agents and generating a map of society that the state can observe and control, thus credibly committing to the enforcement of the legal rights demanded by impersonal markets. Religion, in contrast, embraces complex social identities. Within these communities, economic actors can monitor and sanction misbehavior. Both approaches have benefits and problems. The rule of law allows for trade among strangers, fostering peaceful pluralism. However, law breeds what Montesquieu …

Were The 1982 Merger Guidelines Old News?, Alan J. Meese, Sarah L. Stafford

Faculty Publications

This paper examines the impact of the 1982 Department of Justice Merger Guidelines on the stock market prices of publicly traded firms in the United States. We argue that those Guidelines were perceived by the market as a real change in enforcement policy that would result in substantial deregulation of mergers throughout the economy. We conduct an event study of S&P 500 firms to test this hypothesis and find evidence of a significant positive effect on the stock prices of firms in moderately concentrated industries subject to antitrust regulation, the firms for which the 1982 Guidelines articulate a substantially less …

Social Value Orientation And The Law, Rebecca Hollander-Blumoff

William & Mary Law Review

Social value orientation is a psychological trait defined as an individual’s natural preference with respect to the allocation of resources. Law and economics scholarship takes as its starting point the rational actor, who is by definition interested solely in maximizing her own personal utility. But social psychology research demonstrates that, in study after study, approximately half of individuals demonstrate a “prosocial” orientation, meaning that they are interested in maximizing the total outcome of the group and are dedicated to an equal split of resources. Only around a quarter of individuals identify as “proself” individualists who prefer to maximize their own …

The Problem Of Creative Collaboration, Anthony J. Casey, Andres Sawicki

William & Mary Law Review

In this Article, we explore a central problem facing creative industries: how to organize collaborative creative production. We argue that informal rules are a significant and pervasive—but nonetheless underappreciated—tool for solving the problem. While existing literature has focused on how informal rules sustain incentives for producing creative work, we demonstrate how such rules can facilitate and organize collaboration in the creative space.

We also suggest that informal rules can be a better fit for creative organization than formal law. On the one side, unique features of creativity, especially high uncertainty and low verifiability, lead to organizational challenges that formal law …

Doux Commerce, Religion, And The Limits Of Antidiscrimination Law, Nathan B. Oman

Faculty Publications

Recent cases involving religious businesses owners who object to providing services for same-sex weddings and resulting lawsuits have generated a vigorous academic and popular debate. That debate centers in part on the proper role of religion in the market. This article develops three theories of the proper relationship between commerce and religion and applies them to these conflicts. The first approach would apply the norms of liberal democratic governments to market actors. The second approach posits that any market outcome is legitimate so long as it results from voluntary contracts. These approaches yield contradictory and indeterminate advice on the conflicts …

The Logic Of Contract In The World Of Investment Treaties, Julian Arato

William & Mary Law Review

Investment treaties protect foreign investors who contract with sovereign states. It remains unclear, however, whether parties are free to contract around these treaty rules, or whether treaty provisions should be understood as mandatory terms that constrain party choice. While investment treaties clearly apply to contracts in some way, they are silent as to how these instruments ultimately interact. Moreover, arbitral jurisprudence has varied wildly on this point, creating significant problems of certainty, efficiency, and fairness—for states and foreign investors alike.

This Article reappraises the treaty/contract issue from the ex ante perspective of contracting states and foreign investors. I advance three …

Friendly Precedent, Anthony Niblett, Albert H. Yoon

William & Mary Law Review

This Article explores which legal precedents judges choose to support their decisions.When describing the legal landscape in a written opinion, which precedent do judges gravitate toward? We examine the idea that judges are more likely to cite “friendly” precedent. A friendly precedent, here, is one that was delivered by Supreme Court Justices who have similar political preferences to the lower court judges delivering the opinion. In this Article, we test whether a federal Court of Appeals panel is more likely to engage with binding Supreme Court precedent when the political flavor of that precedent is aligned with the political composition …

Non-Compete Legislation Is Getting Worse With Latest Revisions, Nathan B. Oman

Popular Media

No abstract provided.

Liability And Compensation For Damage Resulting From Co2 Storage Sites, Michael Faure

William & Mary Environmental Law and Policy Review

This Article follows the economic analysis of law as the methodology for analyzing appropriate liability and compensation mechanisms with respect to damages resulting from CO2 storage sites. There are various reasons for employing this approach. One reason is that many have already discussed the design of a liability and compensation scheme for CCS-related damages. But these earlier studies have not yet approached the issue from the angle of an economic analysis of law. The advantage of thismethodology is that attention is paid to the way in which various liability and compensation schemes affect the incentives for prevention of the various …

Community Versus Market Values Of Life, Robert Cooter, David Depianto

William & Mary Law Review

Individuals and communities make choices affecting the risk of accidental death. Individuals balance risk and cost in market choices, for example, by purchasing costly safety products or taking a dangerous job for higher pay. Communities balance risk and cost through social norms of precaution, which prescribe how much risk people may impose on others and on themselves. For example, social norms dictate that bicyclists should wear helmets and automobile passengers should wear seat belts. In both cases, the balance between the fatality risk and the cost of reducing it reveals an implicit value of a statistical life, or “VSL”— an …

The Case For Vertical Integration In The Developing Bioenergy Industry, Isabel F. Peres, Timothy A. Slating, Jay P. Kesan

William & Mary Environmental Law and Policy Review

For many countries, money grows on trees: woody biomass is one of the most important sources of renewable energy in the European Union. In the United States, biomass was the input for almost half of the renewable energy generated in 2000; of the energy generated by biomass, seventy-six percent was produced from wood.1 Currently, biomass is the largest source of renewable energy in the country. The ability to secure a reliable and stable supply of biomass is therefore extremely important for the future of the renewable energy industry. According to the United States Department of Energy, the success of the …

Delaware’S Familiarity, Brian J. Broughman, Darian M. Ibrahim

Popular Media

No abstract provided.

Up Close And Personal With Delaware, Darian M. Ibrahim, Brian J. Broughman

Popular Media

No abstract provided.

When Should Bankruptcy Be An Option (For People, Places, Or Things)?, David A. Skeel Jr.

William & Mary Law Review

When many people think about bankruptcy, they have a simple left-to-right spectrum of possibilities in mind. The spectrum starts with personal bankruptcy, moves next to corporations and other businesses, and then to municipalities, states, and finally countries. We assume that bankruptcy makes the most sense for individuals; that it makes a great deal of sense for corporations; that it is plausible but a little more suspect for cities; that it would be quite odd for states; and that bankruptcy is unimaginable for a country.

In this Article, I argue that the left-to-right spectrum is sensible but mistaken. After defining “bankruptcy,” …