Economics Commons^™

Norms, Rationality, And Communication: A Reputation Theory Of Social Norms, Andreas Engert

ExpressO

Does the discovery of "law and social norms" necessitate breaking with the rational choice paradigm? In this paper, I argue for an answer in the negative. To this end, I propose a reputation theory of social norms, which differs from other proposals in two principal respects: First, it explains norms without any assumption of behavioral constraints (like habit or conscience) and normative motivations (like altruism or aspiration to esteem). Second, it does even without any assumption regarding model-exogenous, private information that most other reputation and signaling explanations use (such as the discount rate in Eric Posner's signaling model).

Instead, reputation …

Real Options In Law: (Possibly, Frivolous) Litigation And Other Applications, Peter H. Huang

ExpressO

This Article advances the thesis that real options are not only ubiquitous in law, but also provide novel insights about legal decision making, doctrines and rules. An introduction provides a brief a primer about financial options, real options, and real options in law. Part I of this Article develops implications of the fact that every lawsuit contains a sequence of real options for the plaintiff to unilaterally abandon that lawsuit. Part II of this Article appraises the limitations of game-theoretic analysis of the abandonment options embedded in litigation and some responses to such limitations. Part III of this Article illustrates …

No Free Lunch: How Settlement Can Reduce The Legal System's Ability To Induce Efficient Behavior, Abraham Lee Wickelgren

ExpressO

While there is widespread agreement that it is better for cases to settle than go to trial, the arguments in favor of settlement have typically overlooked how settlement affects one of the most important functions of the legal system: influencing the behavior that gives rise to lawsuits. This essay argues that, in some cases, settlement can impair the ability of the legal system to deter harmful behavior without chilling desirable behavior. Where it exists, this effect is a fundamental property of settlement in that there is no way to change other legal rules to eliminate it. Because settlements also have …

Affirmative Action: More Efficient Than Color Blindness, Abraham Lee Wickelgren

ExpressO

One of the most compelling reasons against affirmative action is the principle of color blindness, that is, the idea that race is an irrelevant characteristic that should not affect higher education admissions or hiring decisions. Despite its intuitive appeal, this paper shows that adherence to this principle impedes economic efficiency when there has been past discrimination based on color. Past discrimination creates inefficiencies in the economy that persist across generations. Because of this persistence, race is not an irrelevant characteristic for firms and universities looking to hire or admit the best candidates. Affirmative action, not color-blindness, is necessary to reduce …

The Rational Exuberance Of Structuring Venture Capital Startups, Victor Fleischer

ExpressO

This Article takes the bursting of the dot com bubble as an opportunity to reevaluate the tax structure of venture capital startups. By organizing startups as corporations rather than as partnerships, investors and entrepreneurs seem to leave money on the table by failing to fully use tax losses -- especially since the vast majority of startups fail. Conventional wisdom attributes the lack of attention paid to losses to a "gambler's mentality" or optimism bias. I argue here that the use of the corporate form is, in fact, rational, or at least that there is a method to the madness.

I …

Adverse Selection And Moral Hazard In Forum Shopping: Conflicts Of Law As Spontaneous Order, Nita Ghei, Francesco Parisi

ExpressO

In a world with multiple, overlapping jurisdictions, any given litigation could be pursued in more than one forum. Different laws can yield different outcomes. This leads to parties selecting a forum percieved as favorable to file suit. This practice, also known as forum shopping, has been much criticized, and various reforms to the law of conflicts of law have been proposed as a way to reduce this practice. The article examines the inefficiencies associated with forum selection, and the alleged shortcomings in conflicts law as it currently exists. We argue that forum selection cannot be eliminated in a world with …

Accountability: Comparing And Benchmarking Performance Of Wc Systems, H. Allan Hunt

Conference Papers

No abstract provided.

Monopoly Power In The Electronic Information Industry: Why, And So What?, Curt A. Hessler

ExpressO

This "law and economics" article diagnoses why monopoly power infects so many markets in the electronic media, communications, and information technology industries (collectively the "Industry"),and recommends changes to prevailing intellectual property and antitrust doctrines to remedy this problem.

The analysis focuses on a single "norm" -- the maximization of economic value, as defined by standard welfare economic theory. Identifying three distinct functions that operate throughout this otherwise diverse Industry -- authoring, publishing, and distribution -- the article notes that two economic peculiarities characterize most Industry markets: the technical feasibility of "non-rivalrous use" of digitized information products, and the frequent "creative …

Bounded Rationality, The Doctrine Of Impracticability, And The Governance Of Relational Contracts, Donald J. Smythe

ExpressO

This article uses a behavioral economics approach to analyze the effects of the doctrine of impracticability on “relational” contracts -- long-term contractual agreements that are typically adapted to changed circumstances and unforeseen contingencies as they arise. In contrast to conventional law and economics studies, the article concludes that the impracticability doctrine has the potential to improve the efficiency and productivity of a wide range of long-term contractual agreements, and offers normative guidelines as to how the doctrine should be applied. The article also examines and rejects various philosophical objections to the impracticability doctrine, such as the arguments that it interferes …

Social Security Reform: An Expository Report, Nathan J. Voss

Honors Capstones

Capstone submitted as a graduation requirement for the BSU Honors Program.

Review Of "The World Bank, A Case For Aid: Building A Consensus For Development Assistance," By James D. Wolfensohn & Nicolas Stern, Bryan Erickson

The University of New Hampshire Law Review

[Excerpt] "The World Bank’s new book, A Case for Aid: Building a Consensus for Development Assistance, indicates how dramatic and lasting the progress against global poverty has been in the past 50 years. It also shows how dramatically the Bank’s own understanding has risen, even in the past decade, of how to make its efforts more effective in relieving poverty and achieving other development goals. These two themes form the basis for the World Bank’s visionary thesis: that eradicating much of the poverty, ill health, and illiteracy around the world is within reach.

The occasion for pronouncing this message in …

Financing Chinese Capitalism: Principal Banks, Economic Crisis, And Chinese Family Firms In Singapore, Henry W. Yeung

Cultural Approaches to Asian Financial Markets

It is a widely circulated myth that Chinese family firms rely exclusively on kinship ties and network capital to finance their domestic and international operations. In this empirical paper, I argue that large Chinese family firms are increasingly engaging with financial markets on a global scale. In order to finance their transnational business activities, these firms require financial services from banks beyond their domestic economies, resulting in a growing number and geographical spread of their principal banks. Second, I contend that as these Chinese family firms are diversifying their principal banks beyond a narrow confinement to other Chinese family-owned banks …

Testimony Before The Subcommittee On Income Security And Family Support Of The House Committee On Ways And Means, Christopher J. O'Leary

Testimonies

No abstract provided.

Trends. Personalities, Motivations, And Capabilities: The Iraq-North Korea Distinction, Ibpp Editor

International Bulletin of Political Psychology

This Trends article discusses and evaluates the handling of public affairs and justifications for military intervention in Iraq by the United States Secretary of State.

Considerations For States Planning Personal Reemployment Accounts, Christopher J. O'Leary

Conference Papers

No abstract provided.

Behavioral Economics And The Sec, Stephen Choi, Adam C. Pritchard

Law & Economics Working Papers Archive: 2003-2009

Investors face myriad investment alternatives and seemingly limitless information concerning those alternatives.Not surprisingly, many commentators contend that investors frequently fall short of the ideal investor posited by the rational actor model. Investors are plagued with a variety of behavioral biases (such as, among others, the hindsight bias, the availability bias, loss aversion, and overconfidence). Even securities market institutions and intermediaries may suffer from biases, led astray by groupthink and overconfidence. The question remains whether regulators should focus on such biases in formulating policy. An omnipotent regulatory decisionmaker would certainly improve on flawed investor decisionmaking. The alternative we face, however, is …

The Functions Of Transaction Costs: Rethinking Transaction Cost Minimization In A World Of Friction, David M. Driesen, Shubha Ghosh

College of Law - Faculty Scholarship

This article critically examines the goal of minimizing transaction costs, including the costs of legal decision-making. This goal permeates the law and economics literature and has profoundly influenced public policy. While most transaction cost scholarship has focused upon private law, this influence has been especially pervasive in public law, where it has contributed to a variety of legal changes aimed at reducing public transaction costs, often through privatization.

We argue that transaction costs perform useful functions. They frequently enable those engaging in transactions to obtain information needed to correct for information asymmetries or inadequate information. They facilitate efficient transactions, allow …

Investor Skepticism V. Investor Confidence: Why The New Research Analyst Reforms Will Harm Investors, John L. Orcutt

Law Faculty Scholarship

Part I of this Article provides an overview of research analysts and their basic functions, including a discussion of sell-side analysts' role in the market's recent boom and bust. Part II examines the conflicts of interest that have plagued sell-side research, and Part III reviews the Regulatory Actions that are meant to address these conflicts. In Part IV, the author will make the case for encouraging, rather than lessening, investor skepticism in sell-side research and will explain why the Regulatory Actions are not likely to improve the performance of sell-side analysts. Finally, Part V will offer a simpler proposal to …

Power, Privilege, And Special Interests: Rent Seeking And Subsidies In Agriculture, Matt Bogard

Agriculture Department Seminar Series

This presentation covers what Public Choice economists refer to as ‘rent seeking,’ generally seeking favor or special privilege from government through subsidies or regulatory advantages. Particularly, the biotech industry is the area of focus for this presentation. Problems with rent seeking in the biotech industry involve less innovation and industry consolidation. Policies related to biotech regulation, school lunch programs, the Clean Air Act, and ethanol subsidies are discussed. A game theoretic approach is used and it is concluded that issues related to rent seeking and special interests are not adequately addressed by recent campaign finance reform efforts. Alternatives such as …

University Technology Transfer And Economic Development: Proposed Cooperative Economic Development Agreements Under The Bayh Dole Act, Clovia Hamilton

Winthrop Faculty and Staff Publications

Technology transfer enables private industry and academia to make practical use of advanced research, development, and technical expertise. Indeed, universities are a rich source of science and technology that can support local government and business development as well as economic growth. Thus, it is essential for research universities to transfer their wisdom to the public for its use and benefit. Today, universities operate in an economic climate that requires both capital and knowledge; takes advantage of government technology initiatives (namely the Bayh- Dole Act);' and serves as a catalyst for the creation of a large number of new, incubated companies. …

Draft Of Rendering Copyright Into Caesar - 2003, Wendy J. Gordon

Scholarship Chronologically

This article makes a simple suggestion. Copyright rules by money, so let it rule the money-bound. Let a different set of rules evolve for more complex uses, particularly when the users have a personal relationship with the utilized text. Copyright. When new artists make transformative use of existing works in settings not characterized by pre-use commercial negotiations, copyright should avoid imposing a distorting burden.

Introduction To, Preferences And Rational Choice: New Perspectives And Legal Implications, Matthew D. Adler, Claire Finkelstein, Peter Huang

Faculty Scholarship

No abstract provided.

Disciplining Globalization: International Law, Illegal Trade, And The Case Of Narcotics, Chantal Thomas

Michigan Journal of International Law

This Article is the first in a series of studies of the globalization of illicit markets. My theses are as follows: First, the increase in international trade in illicit products and services parallels the growth in international trade more generally that accompanies the phenomenon of globalization. Second, at the same time that most international trade law has moved toward a posture of liberalization, there has been a movement to strengthen the prohibition and punishment of trade in illicit transactions. Third, the mechanisms that have developed to regulate this prohibition constitute a significant development in the international legal order.

The Relationship Of Imf Structural Adjustment Programs To Economic, Social, And Cultural Rights: The Argentine Case Revisited, Jason Morgan-Foster

Michigan Journal of International Law

Perhaps as important as what this Note is, is what it is not: Economic theories abound concerning the causes of the Argentine crisis, some of which directly analyze the IMF's causal connection to the Argentine catastrophe. A Note on this subject would be one of economic theory, not international human rights law. While at certain points in the analysis of the human rights implications of SAPs, it will become difficult to avoid some speculation of economic theory, it is not the primary focus of this Note. Rather than implicate the IMF as part of the cause of the crisis, this …

Caveat Emptor: Lessons From Volkswagen's Lemon Purchase, Terence Lau

Management and Marketing Faculty Publications

This article traces Volkswagen's mis-steps in the botched acquisition of Rolls Royce, and solutions are offered for counsel engaged in international transactions with the hope that the practitioner with little experience in the area can avoid similarly embarrassing and costly errors. The article also offers recommendations on how to draft contract clauses for international licensing use, and provides a brief overview of export control regimes counsel should be aware of when engaging in international transactions.

Labor Standards In The United States And Canada, Richard N. Block, Ronald O. Clarke, Karen Roberts

Upjohn Press

Block, Roberts, and Clarke offer a method for comparing ten labor standards across political jurisdictions. They then apply this method to the United States and Canada, an exercise that allows them to settle the long-running dispute over whether or not Canada has higher standards than the U.S., and if so, to what degree.

Two Cheers For Gentrification, J. Peter Byrne

Georgetown Law Faculty Publications and Other Works

The very word "gentrification" implies distaste. Advocates for the poor and ethnic minorities see affluent whites bidding up the prices for urban housing to levels that force poor families out, depriving them of affordable housing, perhaps rendering them homeless, and changing the character of a neighborhood from one that reflects distinct ethnic and class needs and cultural traditions into a bland emporium for expensive consumer goods. Sometimes historic preservation laws are indicted as particular culprits in setting this dynamic in motion. A result of these perceptions is that the legal literature on gentrification, in general, and historic preservation both reflect …

On The Macroeconomic Effects Of Establishing Tradability In Weak Property Rights, Gunnar Eliasson, Clas Wihlborg

Business Faculty Articles and Research

The New Economy is closely associated with computing & communications technology, notably the Internet. We discuss property rights to, and trade in, the difficult-to-define intangible assets increasingly dominating the New Economy, and the possibility of under-investment in these assets. For a realistic analysis we introduce a Schumpeterian market environment (the experimentally organized economy). Weak property rights prevail when the rights to access, use, andtrade in intangible assets cannot be fully exercised. The trade-off between the benefits of open access on the Internet, and the incentive effects of strengthened property rights, depend both on the particular strategy a firm employs to …

Bargaining For Competitiveness: Law, Research, And Case Studies, Richard N. Block Editor

Upjohn Press

This book offers an analysis of the relationship among collective bargaining, firm competitiveness, and employment protections and creation in the United States. The contributors provide an overview of the legal framework and the economic and industrial relations research on collective bargaining, competitiveness, and employment, then follow with four case studies that provide insights into the process of collective bargaining and its current status in the evolving U.S. labor-management system.

The Decline In Employment Of People With Disabilities: A Policy Puzzle, David C. Stapleton Editor, Richard V. Burkhauser Editor

Upjohn Press

The book begins with a documentation of the employment rate decline and ends by spelling out the implications of this decline for public policy. However, the bulk of the book provides a detailed examination of the various explanations for the puzzling decline in employment among the working-aged population with disabilities.