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Articles 5671 - 5700 of 7043

Full-Text Articles in Law and Economics

Market Design With Endogenous Preferences, Aviad Heifetz, Ella Segev, Eric L. Talley Jan 2004

Market Design With Endogenous Preferences, Aviad Heifetz, Ella Segev, Eric L. Talley

Faculty Scholarship

This paper explores the interdependence between market structure and an important class of extra-rational cognitive biases. Starting with a familiar bilateral monopoly framework, we characterize the endogenous emergence of preference distortions during bargaining which cause negotiators to perceive their private valuations differently than they would outside the adversarial negotiation context. Using this model, we then demonstrate how a number of external interventions in the structure and/or organization of market interactions (occurring before trade, after trade, or during negotiations themselves) can profoundly alter the nature of these dispositions. Our results demonstrate that many such interventions frequently (though not always) share qualitatively …

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The Economics Of Form And Substance In Contract Interpretation, Avery W. Katz Jan 2004

The Economics Of Form And Substance In Contract Interpretation, Avery W. Katz

Faculty Scholarship

For over a century, legal commentators have debated the relative merits of formal and substantive approaches to the interpretation of contracts; in recent years, the debate has increasingly been conducted in the language of the economic approach to contract law. While this new wave of scholarship has been relatively successful in relating the traditional debates over formalism to specific transactional and institutional problems such as imperfect information, it has been less productive in terms of generating useful legal or policy recommendations. This Essay proposes a different approach: one that focuses on private rather than public legal decisionmakers as its primary …

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Market Bubbles And Wasteful Avoidance: Tax And Regulatory Constraints On Short Sales, Michael R. Powers, David M. Schizer, Martin Shubik Jan 2004

Market Bubbles And Wasteful Avoidance: Tax And Regulatory Constraints On Short Sales, Michael R. Powers, David M. Schizer, Martin Shubik

Faculty Scholarship

In recent years, a speculative bubble in Internet stocks has burst and several "blue chip" firms have failed amidst high profile allegations of corporate misconduct. Why did high-tech start-ups with no earnings attain such lofty valuations? Why didn't sophisticated investors keep prices at saner levels? And why didn't more sophisticated investors look past accounting gimmicks much earlier to uncover problems at Enron and other firms? More generally, why did the mechanisms of market efficiency prove inadequate? While there obviously is no single answer to these complex questions, this Article focuses on one piece of the problem: U.S. tax and regulatory …

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The Case For Tradable Remedies In Wto Dispute Settlement, Kyle Bagwell, Petros C. Mavroidis, Robert W. Staiger Jan 2004

The Case For Tradable Remedies In Wto Dispute Settlement, Kyle Bagwell, Petros C. Mavroidis, Robert W. Staiger

Faculty Scholarship

In response to concerns over the efficacy of the WTO dispute settlement system, especially in regard to its use by developing countries, Mexico has tabled a proposal to introduce tradable remedies within the Dispute Settlement Understanding. The idea is that a country that has won cause before the WTO, and who is facing non-implementation by the author of the illegal act but feels that its own capacity to exercise its right to impose countermeasures is unlikely to lead to compliance, can auction off that right. The attractiveness of this idea is that it offers an additional possibility to injured WTO …

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Revisiting The Roles Of Legal Rules And Tax Rules In Income Redistribution: A Response To Kaplow & Shavell, Ronen Avraham, David Fortus, Kyle D. Logue Jan 2004

Revisiting The Roles Of Legal Rules And Tax Rules In Income Redistribution: A Response To Kaplow & Shavell, Ronen Avraham, David Fortus, Kyle D. Logue

Articles

The debate over whether legal rules should be used to redistribute resources in society or whether redistribution should be left exclusively to the tax-and-transfer system has long occupied philosophers, political theorists, economists, and legal academicians. For many years, the conventional wisdom on this question among legal scholars seemed to be that blanket generalizations were inappropriate. All systems of redistribution distort individuals' choices and entail administrative costs. Therefore, the argument went, a universal preference for using the tax-and-transfer system to redistribute is not justified. Rather, the choice among institutions to accomplish society's redistributive goals was considered to be "an empirical one …

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Reparations As Redistribution, Kyle D. Logue Jan 2004

Reparations As Redistribution, Kyle D. Logue

Articles

The most controversial, and most intriguing, remedy sought by proponents of slavery reparations involves massive redistribution of wealth from whites to blacks within the United States. This is not to say that reparations proponents have focused only on racial redistribution. Some have called for an official apology from the U.S. government. Others seek the creation of a foundation or institute, funded by U.S. tax dollars, to be devoted to furthering the interests of African Americans, including the funding of K- 12 educational programs for black children and the funding of general civil rights advocacy to counteract the lingering effects of …

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Global Credit Card Use And Debt: Policy Issues And Regulatory Responses, Ronald J. Mann Jan 2004

Global Credit Card Use And Debt: Policy Issues And Regulatory Responses, Ronald J. Mann

Faculty Scholarship

The rise of card-based payments has transformed the landscape of payments in the last half century, from one dominated by government-supported paper-based payments to one dominated by wholly private systems. The rise of those payments presents a number of policy problems, the most serious of which is the empirically demonstrable likelihood that use of the cards here and elsewhere contributes to an undue level of consumer credit and that borrowing on the cards contributes to a rise in the level of consumer bankruptcy. Because increasing financial distress imposes substantial externalities on the economies in which it occurs, the global rise …

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The Case For Auctioning Countermeasures In The Wto, Kyle Bagwell, Petros C. Mavroidis, Robert W. Staiger Jan 2004

The Case For Auctioning Countermeasures In The Wto, Kyle Bagwell, Petros C. Mavroidis, Robert W. Staiger

Faculty Scholarship

A major accomplishment of the Uruguay Round of GATT negotiations in creating the World Trade Organization (WTO) was the introduction of new dispute settlement procedures. These procedures were intended to provide a significant step forward, relative to GATT, in the settling of trade disputes, in large part by ensuring that violations of WTO commitments would be met with swift retaliation ("suspension of concessions") by the affected trading partners. While the dispute settlement procedures of the WTO indeed represent a considerable improvement over those in GATT, nine years of experience under the new procedures suggests that significant problems of enforcement remain …

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Law's Signal: A Cueing Theory Of Law In Market Transition, Robert B. Ahdieh Jan 2004

Law's Signal: A Cueing Theory Of Law In Market Transition, Robert B. Ahdieh

Faculty Scholarship

Securities markets are commonly assumed to spring forth at the intersection of an adequate supply of, and a healthy demand for, investment capital. In recent years, however, seemingly failed market transitions - the failure of new markets to emerge and of existing markets to evolve - have called this assumption into question. From the developed economies of Germany and Japan to the developing countries of central and eastern Europe, securities markets have exhibited some inability to take root. The failure of U.S. securities markets, and particularly the New York Stock Exchange, to make greater use of computerized trading, communications, and …

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The Law Of Duress And The Economics Of Credible Threats, Oren Bar-Gill, Omri Ben-Shahar Jan 2004

The Law Of Duress And The Economics Of Credible Threats, Oren Bar-Gill, Omri Ben-Shahar

Articles

This paper argues that enforcement of an agreement, reached under a threat to refrain from dealing, should be conditioned solely on the threat's credibility. When a credible threat exists, enforcement promotes social welfare and the threatened party's interests. If agreements backed by credible threats were not enforceable, the threatening party would not extort them and would instead refrain from deaing-to the threatened party's detriment. The doctrine of duress, which invalidates such agreements, hurts the coerced party. By denying enforcement when a credible threat exists, the duress doctrine precludes the threatened party from making the commitment necessary to reach agreement. Paradoxically, …

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Politics And The Business Corporation, Robert H. Sitkoff Dec 2003

Politics And The Business Corporation, Robert H. Sitkoff

Law & Economics Working Papers Archive: 2003-2009

This essay explores the policy bases for, and the political economy of, the law's long-standing regulation of corporate political speech. The essay has three parts. First, it contends that the conventional justifications for regulating corporate interventions in politics -- that corporate donations unnaturally skew the political discourse (bad politics) and that corporate political donations harm shareholders (agency costs) -- assume irrational investors and substantial capital market inefficiency. Drawing on public choice theory, the essay also explores the aim of retarding rent-seeking as an alternative justification for regulating corporate interventions in politics. Second, the essay reexamines the history of the regulation …

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Dying To Get Out Of Debt: Consumer Insolvency Law And Suicide In Japan, Mark West Dec 2003

Dying To Get Out Of Debt: Consumer Insolvency Law And Suicide In Japan, Mark West

Law & Economics Working Papers Archive: 2003-2009

This Article explores the complex relation between consumer insolvency law and suicide in Japan, where bankruptcies and suicides have increased dramatically in recent years. The statistical and interview evidence, some of which relates to the creation of a relatively efficient and socially acceptable insolvency mechanism in 2001, suggests that law is at least indirectly relevant to decisions to take one’s own life. Law can bring about debt control and stigma mitigation, each of which can lead to lower levels of stress and depression, each of which can lead to lower suicide rates. Still, responses to the law, even in relatively …

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Employment Market Institutions And Japanese Working Hours, Mark West Dec 2003

Employment Market Institutions And Japanese Working Hours, Mark West

Law & Economics Working Papers Archive: 2003-2009

Why do Japanese workers work such long hours? Beginning with a series of cases in the 1950s, Japanese courts drastically curtailed firms’ abilities to dismiss workers. As a consequence of the inability to dismiss workers legally, large Japanese firms hired a smaller number of workers than were necessary to fulfill capacity without overtime. Employers rely on the working hours of this undersized cadre of workers, carefully screened to rule out the slothful, as a buffer. In bad times, the size of the work force makes dismissal unnecessary. In good times, workers are forced to work long hours. While these court …

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Hand, Posner, And The Myth Of The "Hand Formula", In Symposium, Negligence In The Law, Richard W. Wright Dec 2003

Hand, Posner, And The Myth Of The "Hand Formula", In Symposium, Negligence In The Law, Richard W. Wright

All Faculty Scholarship

There is a striking incongruence between the discussions of negligence in the legal literature, including the American Law Institute's Restatement of Torts, and the understandings of ordinary people and the actual practice of the courts. The legal literature generally assumes that an aggregate-risk-utility test is employed to determine whether conduct was reasonable or negligent. This test was invented by legal academics and inserted in the first Restatement during the first part of the twentieth century, although, as recent studies all conclude, it had almost no support in the cases prior to its adoption in the Restatement and for several decades …

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Valuation Averaging: A New Procedure For Resolving Valuation Disputes, Keith Sharfman Dec 2003

Valuation Averaging: A New Procedure For Resolving Valuation Disputes, Keith Sharfman

Rutgers Law School (Newark) Faculty Papers

In this Article, Professor Sharfman addresses the problem of "discretionary valuation": that courts resolve valuation disputes arbitrarily and unpredictably, thus harming litigants and society. As a solution, he proposes the enactment of "valuation averaging," a new procedure for resolving valuation disputes modeled on the algorithmic valuation processes often agreed to by sophisticated private firms in advance of any dispute. He argues that by replacing the discretion of judges and juries with a mechanical valuation process, valuation averaging would cause litigants to introduce more plausible and conciliatory valuations into evidence and thereby reduce the cost of valuation litigation and increase the …

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Law, Share Price Accuracy, And Economic Performance: The New Evidence, Merritt B. Fox, Randall Morck, Bernard Yeung, Artyom Durnev Dec 2003

Law, Share Price Accuracy, And Economic Performance: The New Evidence, Merritt B. Fox, Randall Morck, Bernard Yeung, Artyom Durnev

Michigan Law Review

Mandatory disclosure has been at the core of U.S. securities regulation since its adoption in the early 1930s. For many decades, this fixture of our financial system was accepted with little examination. Over the last twenty years, however, mandatory disclosure has been subject to intensifying intellectual crosscurrents. Some commentators hold out the U.S. system as the standard for the world. They argue that adoption by other countries of a U.S.-styled system, with its greater corporate transparency, would enhance their economic performance. Other commentators, in contrast, insist that the U.S. mandatory disclosure regime represents a mistake, not a model. These crosscurrents …

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Trust Law, Corporate Law, And Capital Market Efficiency, Robert H. Sitkoff Nov 2003

Trust Law, Corporate Law, And Capital Market Efficiency, Robert H. Sitkoff

Law & Economics Working Papers Archive: 2003-2009

In both the publicly-traded corporation and the private donative trust a crucial task is to minimize the agency costs that arise from the separation of risk-bearing and management. But where the law of corporate governance evolved in the shadow of capital-market checks on agency costs, trust governance did not. Thus, even more than that of close corporations, the law and study of private trusts offers an illuminating counterfactual -- a control, as it were -­ for a playful thought experiment about the importance of capital market efficiency to the law and study of public corporations. The animating idea for this …

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Chicago Man, K-T Man, And The Future Of Behavioral Law And Economics, Robert A. Prentice Nov 2003

Chicago Man, K-T Man, And The Future Of Behavioral Law And Economics, Robert A. Prentice

Vanderbilt Law Review

Most law is aimed at shaping human behavior, encouraging that which is good for society and discouraging that which is bad.' Nonetheless, for most of the history of our legal system, laws were passed, cases were decided, and academics pontificated about the law based on nothing more than common sense assumptions about how people make decisions. A quarter century or more ago, the law and economics movement replaced these common sense assumptions with a well-considered and expressly stated assumption-that man is a rational maximizer of his expected utilities. Based on this premise, law and economics has dominated interdisciplinary thought in …

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Ethnography In The Realm Of The Pragmatic: Studying Pragmatism In Law And Politics, Annelise Riles Nov 2003

Ethnography In The Realm Of The Pragmatic: Studying Pragmatism In Law And Politics, Annelise Riles

Cornell Law Faculty Publications

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The Situation: An Introduction To The Situational Character, Critical Realism, Power Economics, And Deep Capture, Jon Hanson, David Yosifon Nov 2003

The Situation: An Introduction To The Situational Character, Critical Realism, Power Economics, And Deep Capture, Jon Hanson, David Yosifon

Faculty Publications

Throughout most of this introductory Article, we will focus our arguments primarily on economics and law and economics. We believe, however, that the implications of our inquiry extend far beyond those domains. The tendencies we hope to elucidate find their origins in the human animal, not in any particular legal theoretic perspective. It happens that these tendencies are especially prominent in law and economics, currently the dominant theoretical paradigm for creating and analyzing legal policy. But the relevance of our thesis is not confined to one approach , or even to legal-political questions. All humans are more or less implicated, …

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The False Promise Of One Person, One Vote, Grant M. Hayden Nov 2003

The False Promise Of One Person, One Vote, Grant M. Hayden

Michigan Law Review

It has now been four decades since the Supreme Court stepped into the political thicket with its groundbreaking series of reapportionment cases. Those cases rather quickly brought about radical changes in the structure of our national, state, and local governments and, in so doing, reshaped the political landscape of the country in many, mostly beneficial, ways. The reapportionment cases also signaled the beginning of a revolution in the way we view the rights associated with meaningful participation in a democratic society, a revolution that continues to this day. We now enjoy a right to vote that is much more comprehensive …

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Statement On The Third United Nations Conference On The Law Of The Sea In Caracas, July 15th 1974, Mochtar Kusumaatmadja Oct 2003

Statement On The Third United Nations Conference On The Law Of The Sea In Caracas, July 15th 1974, Mochtar Kusumaatmadja

Indonesian Journal of International Law

No abstract provided.

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Grading The Government, Richard Parker Oct 2003

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 …

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Analytical Methods For Lawyers, Howell E. Jackson Sep 2003

Analytical Methods For Lawyers, Howell E. Jackson

Journal of Legal Education

No abstract provided.

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Measuring Recovery For Non-Contractual Investment, Omri Ben-Shahar, Robert A. Mikos Sep 2003

Measuring Recovery For Non-Contractual Investment, Omri Ben-Shahar, Robert A. Mikos

Law & Economics Working Papers Archive: 2003-2009

Parties who make investments that generate externalities may sometimes recover from the beneficiaries, even in the absence of contract. Previous scholarship has shown that granting recovery, based on either the cost of the investment or the benefit it confers, can provide optimal incentives to invest. However, this article demonstrates that the law often awards recovery that is neither purely cost-based, nor purely benefit-based, and instead equals either the greater-of or lesser-of the two measures. These hybrid approaches to recovery distort incentives to invest. The article demonstrates the prevalence of these practices, and explores informational and related reasons why they emerge. …

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Roundtable With Former Directors Of The Bureau Of Economics, Jonathan Baker Sep 2003

Roundtable With Former Directors Of The Bureau Of Economics, Jonathan Baker

Presentations

The roundtable commemorates the 100th anniversary of the FTC's predecessor agency, the Bureau of Corporations. It was sponsored by the FTC's Bureau of Economics (BE) and focused on BE history and contributions of BE and economic analysis to antitrust and consumer protection enforcement, and to research and economic knowledge and policy. BE was featured because the original functions of the Bureau of Corporations were to collect information, to conduct industry and policy research, to prepare reports at the request of the Congress and the President. The panelists for the roundtable consisted of former BE Directors and Acting Directors from the …

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An Agency Costs Theory Of Trust Law, Robert H. Sitkoff Sep 2003

An Agency Costs Theory Of Trust Law, Robert H. Sitkoff

Law & Economics Working Papers Archive: 2003-2009

This Article develops an agency costs theory of the law of private trusts, focusing chiefly on donative trusts. The agency costs approach offers fresh insights into recurring problems in trust law including, among others, modification and termination, settlor standing, fiduciary litigation, trust-investment law and the duty of impartiality, trustee removal, the role of so-called trust "protectors," and spendthrift trusts. The normative claim is that the law of trusts should minimize the agency costs inherent in locating managerial authority with the trustee and the residual claim with the beneficiaries, but only to the extent that doing so is consistent with the …

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What Counts As Fraud? An Empirical Study Of Motions To Dismiss Under The Private Securities Litigation Reform Act, Adam C. Pritchard, Hillary Sale Sep 2003

What Counts As Fraud? An Empirical Study Of Motions To Dismiss Under The Private Securities Litigation Reform Act, Adam C. Pritchard, Hillary Sale

Law & Economics Working Papers Archive: 2003-2009

This article presents the findings of a study of the resolution of motions to dismiss securities fraud lawsuits since the passage of the Private Securities Litigation Reform Act in 1995. Our sample consists of decisions on motions to dismiss in securities class actions by district and appellate courts in the Second and Ninth Circuits for cases filed after the passage of the Reform Act to the end of 2002. These circuits are the leading circuits for the filing of securities class actions and are generally recognized as representing two ends of the securities class action spectrum. Post-PSLRA, the Second Circuit …

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Following The Man On The Clapham Omnibus: Social Science Evidence In Malpractice Litigation, Richard O. Lempert Jul 2003

Following The Man On The Clapham Omnibus: Social Science Evidence In Malpractice Litigation, Richard O. Lempert

Law & Economics Working Papers Archive: 2003-2009

This article responds to proposals to admit statistical evidence from empirical studies of actual health care practices to prove prevailing health practice standards in malpractice litigation by arguing that the case for doing so has numerous weaknesses that advocates of admitting such data commonly ignore. A fundamental concern is that the standard of practice defense co-evolved with prevailing modes of proof and might have been different had proof through experts not allowed for an aspirational as well as an empirical element to reach the jury. The article also argues that generating reliable statistical evidence of standard medical practice can be …

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Random Walks, Non-Cooperation Games, And The Complex Mathematics Of Patent Pricing, F. Russell Denton, Paul J. Heald Jul 2003

Random Walks, Non-Cooperation Games, And The Complex Mathematics Of Patent Pricing, F. Russell Denton, Paul J. Heald

Scholarly Works

Current patent valuation methods have been described charitably as “inappropriate,” “crude,” “inherently unreliable,” and a “guesstimate.” This article provides a more rational and systematic tool than any we have found in the existing literature or relevant case law. We believe our approach to patent valuation will be useful in improving investment decisions, in facilitating licensing negotiations, and in reducing error costs in litigation. An improved valuation metric also promises to make patents easier to take as collateral and to reduce the amount of “Blue Sky” in mergers and acquisitions involving high tech corporations. To the extent that valuation problems have …

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