Law and Economics Commons^™

When Extrinsic Incentives Displace Intrinsic Motivation: Designing Legal Carrots And Sticks To Confront The Challenge Of Motivational Crowding-Out, Kristen Underhill

Faculty Scholarship

The rise of “nudges” has inspired countless efforts to encourage individual choices that maximize personal and collective welfare, with a preference for less restrictive tools such as setting default options or reordering choice sets. As part of this trend, there has been renewed interest in the behavioral impacts of incentives – namely, rewards or penalties for shaping individual choices, including but not limited to financial incentives. Explicit incentives are pervasive in the law, including carrots offered by governments (for example, tax deductions for charitable contributions, rebates for recycling, sentence reductions for prisoners who complete drug rehabilitation programs, and incentives for …

Overcoming The Great Forgetting: A Comment On Fishkin And Forbath, Jedediah S. Purdy

Faculty Scholarship

Fishkin and Forbath’s (F&F’s) manuscript is a project of recovery. It portrays the present as a time marked by a “Great Forgetting” of a tradition of constitutional political economy. F&F name what has been forgotten the “democracy of opportunity” tradition. Recovering it would mean again treating the following three principles as linked elements at the core of our Constitution: (1) an anti-oligarchy principle that works to prevent wealth from producing grossly unequal political power; (2) a commitment to a broad middle class with secure, respected work; and (3) a principle of inclusion that opens participation in both citizenship and the …

Separations Of Wealth: Inequality And The Erosion Of Checks And Balances, Kate Andrias

Articles

American government is dysfunctional: Gridlock, filibusters, and expanding presidential power, everyone seems to agree, threaten our basic system of constitutional governance. Who, or what, is to blame? In the standard account, the fault lies with the increasing polarization of our political parties. That standard story, however, ignores an important culprit: Concentrated wealth and its organization to achieve political ends. The only way to understand our current constitutional predicament—and to rectify it—is to pay more attention to the role that organized wealth plays in our system of checks and balances. This Article shows that the increasing concentration of wealth and political …

Keynote Remarks, Vanita Gupta

Michigan Journal of Race and Law

In communities across America today, from Ferguson, Missouri, to Flint, Michigan, too many people—especially young people and people of color—live trapped by the weight of poverty and injustice. They suffer the disparate impact of policies driven by, at best, benign neglect, and at worst, deliberate indifference. And they see how discrimination stacks the deck against them. So today, as we discuss the inequality that pervades our criminal justice system—a defining civil rights challenge of the 21st century—we must also acknowledge the broader inequalities we face in other segments of society. Because discrimination in so many areas—from the classroom, to the …

The Municipally Owned Gasoline Station In Somerset, Ky: The Economic And Legal Consequences, Ashley Stearns Hoover

Kentucky Journal of Equine, Agriculture, & Natural Resources Law

No abstract provided.

What Iron Pipefittings Can Teach Us About Public And Private Power In The Market, Sandeep Vaheesan

Indiana Law Journal

Government restrictions on competition, whether in the market for cars, hotel rooms, or taxicabs, have attracted a great deal of attention of late. As a basic matter, government is not exogenous to the market: a functioning state is, in reality, a precondition for modern markets. Because it establishes the rules necessary for markets to develop and potentially flourish, government unavoidably shapes the bounds and structures of the private economic sphere. And more specifically, public limitations on competition are not intrinsically hostile to the interests of ordinary Americans and can, in fact, advance vital social goals, such as full employment and …

The Final Step To Insider Trading Reform: Answering The "It's Just Not Right!" Objection, John P. Anderson

Journal Articles

This Article proceeds as follows: Section I sets the table by dismissing the notion that economic analysis of law should enjoy some privileged status (as more precise, rigorous, or scientific) over ethical analysis of law. Rather, it is suggested that economic and ethical reasons are best understood as different tools suited for different roles in legal reform. It is then argued that, given the current climate, ethical reasoning is the best tool for overcoming the remaining obstacles to insider trading reform in the United States. Section II begins the ethical analysis by arguing that even if it were admitted that …

The Forgotten Core Of The Telecommunications Act Of 1996, Philip J. Weiser

Publications

No abstract provided.

Don't End Or Audit The Fed: Central Bank Independence In An Age Of Austerity, Neil H. Buchanan, Michael C. Dorf

UF Law Faculty Publications

The Federal Reserve (the Fed) is the central bank of the United States. Because of its power and importance in guiding the economy, the Fed's independence from direct political influence has made it a target of ideologically motivated attacks throughout its history, with an especially aggressive round of attacks coming in the wake of the 2008 financial crisis and ongoing today. We defend Fed independence. We point to the Fed's exemplary performance during and after the 2008 crisis, and we offer the example of a potential future crisis in which Congress falls to increase the debt ceiling to show how …

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 …

To Whom It May Concern: International Human Rights Law And Global Public Goods, Daniel Augenstein

Indiana Journal of Global Legal Studies

Public goods and human rights are sometimes treated as intimately related, if not interchangeable, strategies to address matters of common global concern. The aim of the present contribution is to disentangle the two notions to shed some critical light on their respective potential to attend to contemporary problems of globalization. I distinguish the standard economic approach to public goods as a supposedly value-neutral technique to coordinate economic activity between states and markets from a political conception of human rights law that empowers individuals to partake in the definition of the public good. On this basis, I contend that framing global …

The High Cost Of Transferring The Dream, Kim Brooks

Articles, Book Chapters, & Popular Press

This paper is part of a larger project where I use the facts in tax decisions to reveal something about who we are. It looks through a small window into the lives of the people who find themselves caught between our collective and their individual expenditure aspirations. More specifically, it explores the circumstances in which individuals find that their outstanding tax debts pose a threat to their ability to maintain ownership of their home.

In this paper I use the facts of tax cases for two ends. First, I am interested in disrupting legal knowledge hierarchies. We choose cases to …

Economic Crisis And The Integration Of Law And Finance: The Impact Of Volatility Spikes, Edward G. Fox, Merritt B. Fox, Ronald J. Gilson

Faculty Scholarship

The 2008 financial crisis raised puzzles important for understanding how the capital market prices common stocks and in turn, for the intersection between law and finance. During the crisis, there was a dramatic fivefold spike, across all industries, in "idiosyncratic risk" – the volatility of individual-firm share prices after adjustment for movements in the market as a whole.

This phenomenon is not limited to the most recent financial crisis.This Article uses an empirical review to show that a dramatic spike in idiosyncratic risk has occurred with every major downturn from the 1920s through the recent financial crisis. It canvasses three …

Building Labor's Constitution, Kate Andrias

Faculty Scholarship

This essay begins with a puzzle: scholars have built a robust set of constitutional claims about labor rights, claims with deep roots in the labor movement’s own past struggles and its own traditions of constitutional claim-making. Yet, workers’ movements today have made no use of these claims, Andrias reports. The reason, she suggests, has to do with the deep mutual hostility between workers’ movements and the courts. If past were prologue, workers could at least use such arguments outside the courts, but, she argues, “in our [contemporary] legal culture, constitutional arguments are primarily judicial arguments,” and have a way of …

Driverless Cars And The Much Delayed Tort Law Revolution, Andrzej Rapaczynski

Faculty Scholarship

The most striking development in the American tort law of the last century was the quick rise and fall of strict manufacturers’ liability for the huge social losses associated with the use of industrial products. The most important factor in this process has been the inability of the courts and academic commentators to develop a workable theory of design defects, resulting in a wholesale return of negligence as the basis of products liability jurisprudence. This article explains the reasons for this failure and argues that the development of digital technology, and the advent of self-driving cars in particular, is likely …

The Wolf At The Door: The Impact Of Hedge Fund Activism On Corporate Governance, John C. Coffee Jr., Darius Palia

Faculty Scholarship

Hedge fund activism has recently spiked, almost hyperbolically. No one disputes this, and most view it as a significant change. But, their reasons differ. Some see activist hedge funds as the natural champions of dispersed and diversified shareholders, who are less capable of collective action in their own interest. A key fact about activist hedge funds is that they are undiversified and typically hold significant stakes in the companies that comprise their portfolios. Given their larger stakes and focused holdings, they are less subject to the “rational apathy” that characterizes more diversified and even indexed investors, such as pension and …

From British Westinghouse To The New Flamenco: Misunderstanding Mitigation, Victor P. Goldberg

Faculty Scholarship

Both the venerable British Westinghouse decision and the current New Flamenco case have been analyzed in terms of mitigation. Properly understood, in neither is mitigation relevant. Although in the former, the House of Lords came to the right result, the replacement of the substandard turbines with new superior ones was not to mitigate damages — the buyer would have installed the new turbines even had the Westinghouse turbines met the contractual specifications. Even if Westinghouse’s failure accelerated the replacement (which it almost certainly did not) it would have been a mistake to compensate the buyer for the cost of the …

Variation In Boilerplate: Rational Design Or Random Mutation?, Stephen J. Choi, G. Mitu Gulati, Robert E. Scott

Faculty Scholarship

Standard contract doctrine presumes that sophisticated parties choose their terminology carefully because they want courts or counterparts to understand what they intended. The implication of this “Rational Design” model of rational behavior is that courts should pay careful attention to the precise phrasing of contracts. Using a study of the sovereign bond market, we examine the Rational Design model as applied to standard-form contracting. In NML v. Argentina, federal courts in New York attached importance to the precise phrasing of the boilerplate contracts at issue. The industry promptly condemned the decision for a supposedly erroneous interpretation of a variant of …

Linkages To The Resource Sector: The Role Of Companies, Governments, And International Development Cooperation, Columbia Center On Sustainable Investment

Columbia Center on Sustainable Investment Staff Publications

With support from GIZ, CCSI prepared a report titled "Linkages to the Resource Sector: The Role of Companies, Governments, and International Development Cooperation." It outlines options for how these stakeholders can increase the economic linkages to the extractive industries sector not only in terms of ‘breadth’ (number of linkages) but also in terms of ‘depth’ (local value added). Apart from providing the theoretical framework for linkage creation and an overview of existing literature on this topic, the study highlights successful case study examples. Recommendations are provided for the three types of stakeholders.

Poverty In The Human Rights Jurisprudence Of The Nigerian Appellate Courts (1999-2011), Obiora C. Okafor, Basil E. Ugochukwu

Articles & Book Chapters

The major objective of this article is to examine the extent to which the human rights jurisprudence of the Nigerian appellate courts has been sensitive and/or receptive to the socio-economic and political claims of Nigeria’s large population of the poor and marginalized. In particular, the article considers: the extent to which Nigerian human rights jurisprudence has either facilitated or hindered the efforts of the poor to ameliorate their own poverty; the kinds of conceptual apparatuses and analyses utilized by the Nigerian courts in examining the issues brought before it that concerned the specific conditions of the poor; and the key …

Securitization And Post-Crisis Financial Regulation, Steven L. Schwarcz

Faculty Scholarship

There are few types of securities as internationally traded as those issued in securitization (also spelled securitisation) transactions. The post-financial crisis regulatory responses to securitization in the United States and Europe are, at least in part, political and ad hoc. To achieve a more systematic regulatory framework, this article examines how existing regulation should be supplemented by identifying the market failures that apply distinctively to securitization and analyzing how those market failures could be corrected. Among other things, the article argues that Europe’s regulatory framework for simple, transparent, and standardised (“STS”) securitizations goes a long way towards addressing complexity as …

Brief Of Amici Curiae 56 Professors Of Law And Economics In Support Of Petition Of Writ Of Certiorari, John R. Allison, Margo Bagley, James Bessen, Jeremy Bock, Daniel H. Brean, Michael A. Carrier, Michael W. Carroll, Bernard Chao, Tun-Jen Chiang, Colleen V. Chien, Andrew Chin, Robert Cook-Deegan, Md, Rochelle Dreyfuss, Dr. Dieter Ernst, Samuel F. Ernst, Robin C. Feldman, Lee Fleming, Brian Frye, William Gallagher, Shubha Ghosh, Eric Goldman, Bronwyn H. Hall, Yaniv Heled, Christian Helmers, Joachim Henkel, Susan Helper, Tim Holbrook, Herbert Hovenkamp, William Hubbard, Dr. Xavier Jaravel, Dennis S. Karjala, Peter Lee, Mark A. Lemley, David K. Levine, David S. Levine, Doug Lichtman, Yvette Joy Liebesman, Orly Lobel, Brian Love, Phil Malone, Michael J. Meurer, Dr. Shawn Miller, Matthew Mitchell, Susan Barbieri Montgomery, Sean Pager, Arti K. Rai, Jacob H. Rooksby, Jorge R. Roig, Matthew Sag, Pamela Samuelson, Ana Santos Rutschman, Lea Bishop Shaver, Toshiko Takenaka, John L. Turner, Jennifer Urban, Eric Von Hippel

Faculty Scholarship

28 U.S.C. § 1400(b) provides that a defendant in a patent case may be sued where the defendant is incorporated or has a regular and established place of business and has infringed the patent. This Court made clear in Fourco Glass Co. v. Transmirra Prods. Corp., 353 U.S. 222, 223 (1957), that those were the only permissible venues for a patent case. But the Federal Circuit has rejected Fourco and the plain meaning of § 1400(b), instead permitting a patent plaintiff to file suit against a defendant anywhere there is personal jurisdiction over that defendant. The result has been rampant …

Law And Project Finance, Krishnamurthy V. Subramanian, Frederick Tung

Faculty Scholarship

We investigate Project Finance as a private response to inefficiencies created by weak legal protection of outside investors. We offer a new illustration that law matters by demonstrating that for large investment projects, Project Finance provides a contractual and organizational substitute for investor protection laws. Project Finance accomplishes this by making cash flows verifiable through two mechanisms: (i) contractual arrangements made possible by structuring the project within a single, discrete entity legally separate from the sponsor; and (ii) private enforcement of these contracts through a network of project accounts that ensures lender control of project cash flows. Comparing bank loans …

Building Labor's Constitution, Kate Andrias

Articles

In the last few years, scholars have sought to revitalize a range of constitutional arguments against mounting economic inequality and in favor of labor rights. They urge contemporary worker movements to lay claim to the Constitution. But worker movements, for the most part, have not done so. This Essay takes seriously that choice. It examines reasons for the absence of constitutional argumentation by contemporary worker movements, particularly the role of courts and legal elites in our constitutional system, and it contends that labor’s ongoing statutory and regulatory reform efforts are essential prerequisites to the development of progressive constitutional labor rights. …

The Dialectics Of Bank Capital: Regulation And Regulatory Capital Arbitrage, Erik F. Gerding

Publications

This article outlines the reasons that banks and other financial institutions engage in regulatory capital arbitrage and the techniques they use to do so. Regulatory capital arbitrage describes transactions and structures that firms use to lower the effective regulatory “tax rate” of regulatory capital requirements. To the extent that these regulations force financial institutions to internalize the externalities created by their potential insolvency (including systemic risk externalities), the incentives to engage in regulatory capital arbitrage will persist. Financial institutions employ a range of complex transactions and structures, including securitization, to engage in regulatory capital arbitrage.

The article briefly sketches how …

A Bridge Between: Law And The New Intellectual Histories Of Capitalism, Ajay K. Mehrotra

Buffalo Law Review

No abstract provided.

Organic Poise: Capitalism As Law, Christopher Tomlins

Buffalo Law Review

No abstract provided.

Shareholder Political Primacy, Jay B. Kesten

Scholarly Publications

Corporate political activity raises an important and difficult 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 …

Fossil Fuel Abolition: Legal And Social Issues, Karl S. Coplan

Elisabeth Haub School of Law Faculty Publications

This Article will examine the practical, ethical, legal, and socio-political implications of fossil fuel abolition. First, the Article will consider the practical, ethical, and legal arguments in favor of fossil fuel abolition. Then, the Article will examine possible legal means and authorities to implement abolition in the United States, as well as potential legal objections to fossil fuel abolition. Finally, the Article will consider legal abolition’s capacity to effect the far-reaching changes in our socioeconomic system that a ban on fossil fuels will entail. The Article also will compare the climate reform movement to other social law reform movements in …

Capitalism And Risk: Concepts, Consequences, And Ideologies, Edward A. Purcell Jr.

Buffalo Law Review

No abstract provided.