Social and Behavioral Sciences Commons^™

Shareholders And Social Welfare, William W. Bratton, Michael L. Wachter

All Faculty Scholarship

This article addresses the question whether (and how) the shareholders matter for social welfare. Answers to the question have changed over time. Observers in the mid-twentieth century believed that the socio-economic characteristics of real world shareholders were highly pertinent to social welfare inquiries. But they went on to conclude that there followed no justification for catering to shareholder interest, for shareholders occupied elite social strata. The answer changed during the twentieth century’s closing decades, when observers came to accord the shareholder interest a key structural role in the enhancement of economic efficiency even as they also deemed irrelevant the characteristics …

Conditional Spending After Nfib V. Sebelius: The Example Of Federal Education Law, Eloise Pasachoff

Georgetown Law Faculty Publications and Other Works

In NFIB v. Sebelius, the Supreme Court’s recent case addressing the constitutionality of the Affordable Care Act, the Court concluded that the expansion of Medicaid in that Act was unconstitutionally coercive and therefore exceeded the scope of Congress’s authority under the Spending Clause. This was the first time that the Court treated coercion as an issue of more than mere theoretical possibility under the Spending Clause. In the wake of the Court’s decision, commentators have expressed either the concern or the hope that NFIB’s coercion analysis may lead to the undoing of much of the federal regulatory state, …

Is There A Role For Common Carriage In An Internet-Based World?, Christopher S. Yoo

All Faculty Scholarship

During the course of the network neutrality debate, advocates have proposed extending common carriage regulation to broadband Internet access services. Others have endorsed extending common carriage to a wide range of other Internet-based services, including search engines, cloud computing, Apple devices, online maps, and social networks. All too often, however, those who focus exclusively on the Internet era pay too little attention to the lessons of the legacy of regulated industries, which has long struggled to develop a coherent rationale for determining which industries should be subject to common carriage. Of the four rationales for determining the scope of common …

Happiness Surveys And Public Policy: What’S The Use?, Matthew D. Adler

All Faculty Scholarship

This Article provides a comprehensive, critical overview of proposals to use happiness surveys for steering public policy. Happiness or “subjective well-being” surveys ask individuals to rate their present happiness, life-satisfaction, affective state, etc. A massive literature now engages in such surveys or correlates survey responses with individual attributes. And, increasingly, scholars argue for the policy relevance of happiness data: in particular, as a basis for calculating aggregates such as “gross national happiness,” or for calculating monetary equivalents for non-market goods based on coefficients in a happiness equation.

But is individual well-being equivalent to happiness? The happiness literature tends to blur …

A Theory Of Preferred Stock, William W. Bratton, Michael L. Wachter

All Faculty Scholarship

No abstract provided.

An Optimist's Take On The Decline Of Small-Employer Health Insurance, Allison K. Hoffman

All Faculty Scholarship

In their Article, Saving Small-Employer Health Insurance, Amy Monahan and Dan Schwarcz contend that the Patient Protection and Affordable Care Act (“ACA”) could be the death of small-group health insurance by incentivizing many small employers not to offer coverage. While their prediction that the ACA, after implemented, will destabilize the small-group insurance market may prove true, I argue why their prescription that it should be saved is flawed and why we may be better off without small group insurance.

The Trouble With Basic: Price Distortion After Halliburton, Jill E. Fisch

All Faculty Scholarship

Many commentators credit the Supreme Court’s decision in Basic, Inc. v. Levinson, which allowed courts to presume reliance rather than requiring individualized proof, with spawning a vast industry of private securities fraud litigation. Today, the validity of Basic’s holding has come under attack as scholars have raised questions about the extent to which the capital markets are efficient. In truth, both these views are overstated. Basic’s adoption of the Fraud on the Market presumption reflected a retreat from prevailing lower court recognition that the application of a reliance requirement was inappropriate in the context of impersonal public …

A Market For Justice: A First Empirical Look At Third Party Litigation Funding, David S. Abrams, Daniel L. Chen

All Faculty Scholarship

The alienability of legal claims holds the promise of increasing access to justice and fostering development of the law. While much theoretical work points to this possibility, no empirical work has investigated the claims, largely due to the rarity of trading in legal claims in modern systems of law. In this paper we take the first step toward empirically testing some of these theoretical claims using data from Australia. We find some evidence that third-party funding corresponds to an increase in litigation and court caseloads. Cases with third-party funders are more prominent than comparable ones. While third-party funding may have …

Distinguishing Probability Weighting From Risk Misperceptions In Field Data, Levon Barseghyan, Francesca Molinari, Ted O'Donoghue, Joshua C. Teitelbaum

Georgetown Law Faculty Publications and Other Works

The paper outlines a strategy for distinguishing rank-dependent probability weighting from systematic risk misperceptions in field data. Our strategy relies on singling out a field environment with two key properties: (i) the objects of choice are money lotteries with more than two outcomes and (ii) the ranking of outcomes differs across lotteries. We first present an abstract model of risky choice that elucidates the identification problem and our strategy. The model has numerous applications, including insurance choices and gambling. We then consider the application of insurance deductible choices and illustrate our strategy using simulated data.

Economic Theory Lost In Translation: Will Behavioral Economics Reshape The Compelled Commercial Speech Doctrine, Kyle Rozema

Scholarship@WashULaw

This Article consolidates the economic and legal theory needed to properly analyze the impact of salience measures on the commercial speech doctrine. By walking through various First Amendment scenarios, this Article describes and differentiates between the two main governmental interests motivating graphic image requirements on cigarette labels: reducing smoking and informing consumers. The Article then sets up a game-theoretic model of the compelled commercial speech doctrine and uses Bayesian inference to make assumptions about how the Supreme Court would rule if it eventually rules on similar graphic images placed on cigarette labels. Solving the model by way of forward induction …

Shleifer's Failure, Jonathan Klick

All Faculty Scholarship

No abstract provided.

The Law And Economics Of Liability Insurance: A Theoretical And Empirical Review, Tom Baker, Peter Siegelman

All Faculty Scholarship

We survey the theoretical and empirical literature on the law and economics of liability insurance. The canonical Shavell model predicts that, despite the presence of some ex ante moral hazard (care-reduction by insureds), liability insurance will generally raise welfare because its risk-spreading gains will likely be larger than its adverse effects on precautionary activities. We discuss the numerous features of liability insurance contracts that are designed to reduce ex ante moral hazard, and examine the evidence of their effects. Most studies conclude that these features work reasonably well, so that liability insurance probably does not generate substantial ex ante moral …

American Gangsters: Rico, Criminal Syndicates, And Conspiracy Law As Market Control, Benjamin Levin

Scholarship@WashULaw

In an effort to re-examine legal and political decisions about criminalization and the role of the criminal law in shaping American markets and social institutions, this Article explores the ways in which criminal conspiracy laws in the United States have historically been used to subdue non-state actors and informal markets that threatened the hegemony of the state and formal market. To this end, the Article focuses primarily on the Racketeer Influenced and Corrupt Organizations Act (RICO) as illustrative of broader trends in twentieth century criminal policy. Enacted in 1970, RICO provides criminal sanctions for individuals engaged in unacceptable organized activities …

Overview And Operation Of U.S. Financial Sanctions, Including The Example Of Iran, Barry E. Carter, Ryan Farha

Georgetown Law Faculty Publications and Other Works

Financial sanctions are increasingly being used in the mix of international economic sanctions being employed by the United Nations, regional entities, and individual countries, including the United States. These financial sanctions have become more focused and effective as the tools and techniques have improved significantly for tracing and identifying the financial transactions of terrorists, weapons proliferators, human rights violators, drug cartels, and others. These sanctions can not only freeze financial assets and prohibit or limit financial transactions, but they also impede trade by making it difficult to pay for the export or import of goods and services.

In spite of …

Thinking Ahead, Looking Back: Assessing The Value Of Regulatory Impact Analysis And Procedures For Its Use, Cary Coglianese

All Faculty Scholarship

Analysis is a tool for making important legislative and regulatory decisions but it is also a way of looking back to see whether decisions made in the past have been good ones. How well have legal rules actually worked in practice? Answering this question is crucial, not only for improving regulation and legislation in the future, but also for improving forward-looking regulatory impact analysis (RIA). This article was originally presented as the keynote address at the 22nd Anniversary International Conference of the Korea Legislation Research Institute in August 2012. It highlights what social scientists have told us generally about the …

Coercion, Compulsion, And The Medicaid Expansion: A Study In The Doctrine Of Unconstitutional Conditions, Mitchell N. Berman

All Faculty Scholarship

The Supreme Court’s decision in National Federation of Independent Business v. Sebelius regarding the constitutionality of the Patient Protection and Affordable Care Act produced three main holdings concerning two critical provisions of the Act. The first two holdings concerned the “individual mandate” that requires most Americans to maintain “minimum essential” health insurance. The third holding concerned “the Medicaid expansion,” which expanded the class of persons to whom the states must provide Medicaid coverage as a condition for receiving federal funds under the Medicaid program. By a vote of 7-2, the Court struck down this provision as an impermissible condition on …

Book Review -- William Patry, How To Fix Copyright, Michael J. Madison

Articles

I review William Patry’s book How to Fix Copyright. The book is noteworthy for its ambitious yet measured effort to diagnose where copyright law has gone astray in recent years. It is less successful with respect to proposing possible changes to the law. Most interesting are parallels between How to Fix Copyright and an earlier comprehensive look at copyright law in the digital era: Paul Goldstein’s Copyright’s Highway: From Gutenberg to the Celestial Jukebox. William Patry and Paul Goldstein each have a lot of faith in the power of consumer choice in the cultural marketplace. That faith leads …

Regulating Ex Post: How Law Can Address The Inevitability Of Financial Failure, Iman Anabtawi, Steven L. Schwarcz

Faculty Scholarship

Unlike many other areas of regulation, financial regulation operates in the context of a complex interdependent system. The interconnections among firms, markets, and legal rules have implications for financial regulatory policy, especially the choice between ex ante regulation aimed at preventing financial failure and ex post regulation aimed at responding to that failure. Regulatory theory has paid relatively little attention to this distinction. Were regulation to consist solely of duty-imposing norms, such neglect might be defensible. In the context of a system, however, regulation can also take the form of interventions aimed at mitigating the potentially systemic consequences of a …

Against Endowment Theory: Experimental Economics And Legal Scholarship, Greg Klass, Kathryn Zeiler

Faculty Scholarship

Endowment theory holds the mere ownership of a thing causes people to assign greater value to it than they otherwise would. The theory entered legal scholarship in the early 1990s and quickly eclipsed other accounts of how ownership affects valuation. Today, appeals to a generic “endowment effect” can be found throughout the legal literature. More recent experimental results, however, suggest that the empirical evidence for endowment theory is weak at best. When the procedures used in laboratory experiments are altered to rule out alternative explanations, the “endowment effect” disappears. This and other recent evidence suggest that mere ownership does not …