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Articles 1 - 6 of 6
Full-Text Articles in Social and Behavioral Sciences
Regulating Opt Out: An Economic Theory Of Altering Rules, Ian Ayres
Regulating Opt Out: An Economic Theory Of Altering Rules, Ian Ayres
Ian Ayres
Whenever a rule is contractible, the law must establish separate rules governing how private parties can contract around the default legal treatment. To date, contract theorists have not developed satisfying theories for how optimally to set “altering rules,” the rules that set out the necessary and sufficient conditions for displacing a default. This Article argues that efficiency-minded lawmakers in setting altering rules should consider both the costs of altering and the costs of various kinds of error. There are two broad reasons for altering rules to deviate from attempts to minimize the transaction cost of altering, First, the Article develops …
Race Effects On Ebay, Ian Ayres, Mahzarin Banaji, Christine Jolls
Race Effects On Ebay, Ian Ayres, Mahzarin Banaji, Christine Jolls
Ian Ayres
We investigate the impact of seller race in a field experiment involving baseball card auctions on eBay. Photographs showed the cards held by either a dark-skinned/African-American hand or a light-skinned/Caucasian hand. Cards held by African-American sellers sold for approximately 20% ($0.90) less than cards held by Caucasian sellers, and the race effect was more pronounced in sales of minority player cards. Our evidence of race differentials is important because the on-line environment is well controlled (with the absence of confounding tester effects) and because the results show that race effects can persist in a thick real-world market such as eBay.
Diversification Across Time, Ian Ayres, Barry Nalebuff
Diversification Across Time, Ian Ayres, Barry Nalebuff
Ian Ayres
By employing leverage to gain more exposure to stocks when young, individuals can achieve better diversification across time. Using stock data going back to 1871, we show that early leverage combined with reduced equity exposure when older can reduce lifetime portfolio risk. For example, an initially-leveraged portfolio can produce the same mean accumulation as a constant 75% stock allocation with a 21% smaller standard deviation. Since the mean accumulation is the same, the reduction in volatility does not depend on the equity premium. A leveraged lifecycle strategy can also allow investors to come closer to their utility-maximizing allocation. If risk …
Life-Cycle Investing And Leverage: Buying Stock On Margin Can Reduce Retirement Risk, Ian Ayres, Barry Nalebuff
Life-Cycle Investing And Leverage: Buying Stock On Margin Can Reduce Retirement Risk, Ian Ayres, Barry Nalebuff
Ian Ayres
By employing leverage to gain more exposure to stocks when young, individuals can achieve better diversification across time. Using stock data going back to 1871, we show that buying stock on margin when young combined with more conservative investments when older stochastically dominates standard investment strategies—both traditional life-cycle investments and 100%-stock investments. The expected retirement wealth is 90% higher compared to life-cycle funds and 19% higher compared to 100% stock investments. The expected gain would allow workers to retire almost six years earlier or extend their standard of living during retirement by 27 years.
The Latest Misfires In Support Of The ‘More Guns, Less Crime’ Hypothesis, John Donohue, Ian Ayres
The Latest Misfires In Support Of The ‘More Guns, Less Crime’ Hypothesis, John Donohue, Ian Ayres
Ian Ayres
No abstract provided.
Mutual Versus Unilateral Mistake In Contracts, Eric Bennett Rasmusen, Ian Ayres
Mutual Versus Unilateral Mistake In Contracts, Eric Bennett Rasmusen, Ian Ayres
Ian Ayres
Courts sometimes allow contracts to be voidable because of mistakes in their basic assumptions. The common wisdom is that rescission is more likely to be granted if the mistake is mutual rather than unilateral---an incorrect belief common to both parties, not just to one. Rescission for mistake can be justified as a way to avoid inefficient transactions and to reduce the costs of collecting information on whether a mistake has been made. These reasons do not justify a general rule distinguishing between mutual and unilateral mistake.