Law and Economics Commons^™

The Whole Is Greater Than The Sum Of The Parts: Analyzing Legal Problems In An Endogenous World, Kenneth G. Dau-Schmidt

Articles by Maurer Faculty

No abstract provided.

Beyond Individualism In Law And Economics, Robert B. Ahdieh

Faculty Scholarship

The study of law and economics was built upon two pillars. The first is the familiar assumption of individual rationality. The second, less familiar, is the principle of methodological individualism. Over the last twenty years, law and economics has largely internalized behavioral critiques of the rationality assumption. By contrast, the field has failed to appreciate the implications of growing challenges to its methodological individualism. Where social norms shape individual choices, network externalities are strong, coordination is the operative goal, or information is a substantial determinant of value, a methodology strongly oriented to the analysis of individuals overlooks at least as …

O My Sons And Daughters, How Do I Immiserate Thee: Let Me Count The Ways, Kenneth M. Casebeer

Articles

No abstract provided.

Financial Stability Is A Volume Business: A Comment On The Legal Infrastructure Of Ex Post Consumer Debtor Protections, Anna Gelpern

Georgetown Law Faculty Publications and Other Works

Professor Melissa B. Jacoby's essay pays homage to Stewart Macaulay's classic study of the Magnuson-Moss Warranty Act, a U.S. federal consumer protection law that, according to Macaulay, was virtually unknown to the lawyers whose clients needed it the most. The moral of Macaulay's study is that even good consumer protection laws on the books often fail to deliver in action for complex cultural, institutional, and economic reasons. Yet reducing Professor Jacoby's essay to this very important moral undersells its contribution. A fragmented infrastructure for legal service delivery of the sort she describes does not merely fail consumers more often than …

The Behavioral Economics Of Mergers And Acquisitions, Donald C. Langevoort

Georgetown Law Faculty Publications and Other Works

The world of mergers and acquisitions seems like a setting in which rationality necessarily dominates. There are high stakes, focused and sustained attention, and expert advisers who are repeat players. In the economics and management literature, however, there has been a great deal of research on what might be called “behavioral M&A”—using insights from psychology to explain observed patterns of behavior in the acquisitions marketplace. To date, the law has largely been uninterested in the psychological dynamics of corporate acquisitions. This essay looks at recent research on such issues as the role of overconfidence, hubris, anchoring, etc. in explaining buy-side …

Law As Asymmetric Information: Theory, Application, And Results In The Context Of Foreign Direct Investment In Real Estate, Patrick J. Glen

Georgetown Law Faculty Publications and Other Works

In his seminal 1970 article on lemon markets, George Akerlof posited the possibility of market failure in the presence of asymmetric information regarding a good’s value. In the intervening four decades, the importance of accurate valuation information has grown as transnational trade has boomed. The aim of the instant article is to assess the potential impact on transnational trade of asymmetric information regarding the legal attributes of a given good. Inaccurate or asymmetric information regarding relevant legal attributes may give rise to the same problem of market failure that Akerlof initially posited. If buyers are unsure of the ownership of …

The Creativity Effect, Christopher Buccafusco, Christopher Jon Sprigman

Faculty Scholarship

This Article reports the first experiment to demonstrate the existence of a valua­tion anomaly associated with the creation of new works. To date, a wealth of social science research has shown that the least amount of money that owners of goods are willing to accept to part with their possessions is often far greater than the amount that purchasers would be willing to pay to obtain them. This phenomenon, known as the endowment effect, may create substantial inefficiencies in many markets. Our experi­ment demonstrates the existence of a related "creativity effect." We show that creators of works value their creations …

Who Pays? Who Benefits? Unfairness In American Health Care, Clark C. Havighurst, Barak D. Richman

Faculty Scholarship

American-style health insurance greatly amplifies price-gouging opportunities for health care providers, who inflate prices both to enrich themselves and to subsidize and expand the nation’s health care enterprise. To the extent that lower- and middle-income Americans with private health coverage pay premiums that go to support and expand the system, they are subject to an unfair (regressive) “head tax” levied by unaccountable entities for ostensibly public but also private purposes. Lower-income premium payers also often pay for costly health coverage designed to suit the economic interests and values of professional and other elites rather than their own. They also appear …

Rlt: A Preliminary Examination Of Religious Legal Theory As A Movement, Samuel J. Levine

Scholarly Works

No abstract provided.

Market Realities Do Not Embody Necessary Economic Theory: Why Defendants Deserve A Safe Harbor Under Section 2 Of The Sherman Act For Exclusive Dealing, Danielle N. Paschal

Georgia Law Review

Exclusive dealing agreements are a form of vertical
restraint. They are often procompetitive and treated as
presumptively legal. Although claims against
anticompetitive agreements may be pursued under
numerous antitrust laws, claims have been brought more
recently under section 2 of the Sherman Act. Antitrust
laws generally focus on the percentage of foreclosure.
Section 2 of the Sherman Act, though, requires a smaller
percentage of foreclosure of distribution channels than
other antitrust laws. Analysis under section 2 of the
Sherman Act also focuses on the actual effects of the
agreement in the relevant market. Determining the
agreement's actual effects on the …

Reconceptualizing The Law Of Nuisance Through A Theory Of Economic Captivity, George P. Smith Ii, Matthew Saunig

Scholarly Articles

Generally, the fact that a plaintiff comes to a nuisance is not a per se defense to a nuisance action. This defense is viewed in many jurisdictions as but a factor in determining whether a defendant’s conduct is an unreasonable interference with use and enjoyment of a neighbor’s property. In principle, two other affirmative defenses are — although not often allowed in practice by the courts — found in contributory negligence and assumption of the risk.

This Article seeks to develop a theory of economic captivity which embraces the notion that a plaintiff may be constrained, socio-economically, in making choices …

Charting A Course In Clearing, Colleen M. Baker

Journal Articles

Memorable tales of financial collapse, such as that of Lehman Brothers (Lehman), Bear Stearns, and American Financial Group (AIG), frequently drive narratives of financial market crises and future preventative regulatory solutions. Much U.S. financial regulation, such as the monumental and historic “Dodd-Frank Wall Street Reform and Consumer Protection Act,” (Dodd-Frank) can be understood from this perspective. Aspects of such responses, however, are sometimes puzzling. An example is the reforms surrounding certain financial market utilities in Dodd-Frank’s Title VIII, “Payment, Clearing, and Settlement Supervision Act of 2010” (Title VIII). Financial market utilities often play a vital role in a process known …

Foreword: Advances In The Behavioral Analysis Of Law: Markets, Institutions, And Contracts, Avishalom Tor

Journal Articles

Avishalom Tor, Special Editor

The collection of articles in this Special Issue is based on an international conference on Advances in the Behavioral Analysis of Law: Markets, Institutions, and Contracts that took place on December 8, 2009 at the University of Haifa Faculty of Law in Israel. The conference addressed cutting-edge legal issues at the intersection of law, economics, and psychology from a diverse set of viewpoints, bringing together scholars engaged in both theoretical and experimental behavioral analyses of law.

Optimal Class Size, Opt-Out Rights, And "Indivisible" Remedies, Jay Tidmarsh, David Betson

Journal Articles

Prepared for a Symposium on the ALI’s Aggregate Litigation Project, this paper examines the ALI’s proposal to permit opt-out rights when remedies and “divisible,” but not to permit them when remedies are “indivisible.” Starting from the ground up, the paper employs economic analysis to determine what the optimal size of a class action should be. We demonstrate that, in some circumstances, the optimal size of a class is a class composed of all victims, while in other cases, the optimal size is smaller. We further argue that courts should consider optimal class size in determining whether to certify a class, …

Credit Derivatives, Leverage, And Financial Regulation's Missing Macroeconomic Dimension, Erik F. Gerding

Publications

Of all OTC derivatives, credit derivatives pose particular concerns because of their ability to generate leverage that can increase liquidity - or the effective money supply - throughout the financial system. Credit derivatives and the leverage they create thus do much more than increase the fragility of financial institutions and increase counterparty risk. By increasing leverage and liquidity, credit derivatives can fuel rises in asset prices and even asset price bubbles. Rising asset prices can then mask mistakes in the pricing of credit derivatives and in assessments of overall leverage in the financial system. Furthermore, the use of credit derivatives …

The Curious Case Of Greening In Carbon Markets, William Boyd, James Salzman

Publications

Over the last several years, so-called carbon markets have emerged around the world to facilitate trading in greenhouse gas credits. This Article takes a close look at an unexpected and unprecedented development in some of these markets--premium "green" currencies have emerged and, in some cases, displaced standard compliance currencies. Past experiences with other environmental compliance markets, such as the sulfur dioxide and wetlands mitigation markets, suggest the exact opposite should be occurring. Indeed, buyers in such markets should only be interested in buying compliance, not in the underlying environmental integrity of the compliance unit. In some of the compliance carbon …

Yes, Labor Markets Are Flawed--But So Is The Economic Case For Mandating Employee Voice In Corporate Governance, Scott A. Moss

Publications

No abstract provided.

Under Attack: Terrorism Risk Insurance Regulation, Alexia Brunet Marks

Publications

Scholarly debates over the September 11th attacks focus predominantly on high-profile issues, such as torture, preventive detention, interrogation, privacy, and surveillance. These debates have overshadowed the equally important and far-reaching issue of terrorism risk insurance, which not only involves billions of dollars, but provides powerful incentives to keep us safe. Developing a sound understanding of the market for terrorism risk insurance is essential to guiding the difficult determination of the appropriate balance between private and public responsibility for preventing and (when necessary) compensating for terrorism.

The attacks of September 11th represented one of the costliest insurance events in American history. …

Towards An International Dialogue On The Institutional Side Of Antitrust, Philip J. Weiser

Publications

The antitrust world is now globalized and interconnected, requiring ever-increasing awareness as to how different agencies operate. The need to promote convergence on substantive doctrines has received, and will continue to receive, considerable attention. What is less appreciated is the need to focus on institutional design and practice, particularly as to the promotion of transparency and procedural fairness in the conduct of antitrust investigations. This Essay makes the case for such a focus, explaining how one of the healthy aspects of a multijurisdictional world is that sister agencies can challenge one another and model means of improving our institutional practices. …

Unraveling Privacy: The Personal Prospectus And The Threat Of A Full-Disclosure Future, Scott R. Peppet

Publications

Information technologies are reducing the costs of credible signaling, just as they have reduced the costs of data mining and economic sorting. The burgeoning informational privacy field has ignored this evolution, leaving it unprepared to deal with the consequences of these new signaling mechanisms. In an economy with robust signaling, those with valuable credentials, clean medical records, and impressive credit scores will want to disclose those traits to receive preferential economic treatment. Others may then find that they must also disclose private information to avoid the negative inferences attached to staying silent. This unraveling effect creates new types of privacy …