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Abstract:
This lecture is an introduction to the use of agency models in law and economics. It is designed for first year law students with no background in economics. A simple example is used to illustrate the basic tradeoff between incentives and insurance when a principal is unable to observe an agent's level of effort. The example is then generalized, and several complications (multitasking, multiple agents, teams, etc.) are discussed. The agency model is then used to analyze contract remedies, and (very briefly) issues in torts, corporations, civil procedure, administrative procedure, and other important areas of the law.

Abstract:
This paper analyzes cost-benefit analysis from legal, economic, and philosophical perspectives. The traditional defense of cost-benefit analysis is that it maximizes a social welfare function that aggregates unweighted and unrestricted preferences. We follow many economists and philosophers who conclude that this defense is not persuasive. Cost-benefit analysis unavoidably depends on controversial distributive judgments; and the view that the government should maximize the satisfaction of unrestricted preferences is not plausible. However, we disagree with critics who argue that cost-benefit analysis produces morally irrelevant evaluations of projects and should be abandoned. On the contrary, cost-benefit analysis, suitably constrained, is consistent with a broad array of appealing normative commitments, and it is superior to alterative methods of project evaluation. It is a reasonable means to the end of maximizing overall welfare when preferences are undistorted or can be reconstructed. And it both exploits the benefits of agency specialization and constrains agencies that might otherwise evaluate projects improperly.

Abstract:
This paper analyzes cost-benefit analysis from legal, economic, and philosophical perspectives. The traditional defense of cost-benefit analysis is that it maximizes a social welfare function that aggregates unweighted and unrestricted preferences. We follow many economists and philosophers who conclude that this defense is not persuasive. Cost-benefit analysis unavoidably depends on controversial distributive judgments; and the view that the government should maximize the satisfaction of unrestricted preferences is not plausible. However, we disagree with critics who argue that cost-benefit analysis produces morally irrelevant evaluations of projects and should be abandoned. On the contrary, cost-benefit analysis, suitably constrained, is consistent with a broad array of appealing normative commitments, and it is superior to alternative methods of project evaluation. It is a reasonable means to the end of maximizing overall welfare when preferences are undistorted or can be reconstructed. And it both exploits the benefits of agency specialization and constrains agencies that might otherwise evaluate projects improperly.

Abstract:
This article presents a theory of customary international law ("CIL") that seeks to sort out the many well-known difficulties with standard accounts of CIL. The theory uses simple game theoretical concepts to explain how what we call CIL arises, why nations "comply" with CIL as commonly understood, and how CIL changes. This theory differs from the standard account of CIL in several fundamental respects. It rejects the usual explanations of CIL based on opinio juris, legality, morality, and related concepts. States do not comply with norms of CIL because of a sense of moral or legal obligation; rather, their compliance and the norms themselves emerge from the states' pursuit of self interested policies on the international stage. In addition, the behaviors associated with CIL do not reflect a single, unitary logic. Instead, they reflect various and importantly different logical structures played out in discrete, historically contingent contexts. Finally, the theory is skeptical of the existence of multilateral behavioral regularities that are typically thought to constitute CIL.

The article tests the theory using case studies from four traditional areas of CIL: neutrality, diplomatic immunity, prize, and maritime jurisdiction. We find that most purported rules of CIL reflect pure coincidence of interest, rather than international cooperation, and that the rest are best explained as the outcome of repeated bilateral prisoner's dilemmas or coercion analogous to the behavior of the monopolist in predatory pricing games. We conclude by examining the implications of our analysis for understanding the role of CIL in domestic constitutional arrangements, the function of international treaties and international organizations, and the status of modern international human rights law.

Abstract:
This article presents a theory of customary international law ("CIL") that seeks to sort out the many well-known difficulties with standard accounts of CIL. The theory uses simple game theoretical concepts to explain how what we call CIL arises, why nations "comply" with CIL as commonly understood, and how CIL changes. This theory differs from the standard account of CIL in several fundamental respects. It rejects the usual explanations of CIL based on opinio juris, legality, morality, and related concepts. States do not comply with norms of CIL because of a sense of moral or legal obligation; rather, their compliance and the norms themselves emerge from the states' pursuit of self interested policies on the international stage. In addition, the behaviors associated with CIL do not reflect a single, unitary logic. Instead, they reflect various and importantly different logical structures played out in discrete, historically contingent contexts. Finally, the theory is skeptical of the existence of multilateral behavioral regularities that are typically thought to constitute CIL.

The article tests the theory using case studies from four traditional areas of CIL: neutrality, diplomatic immunity, prize, and maritime jurisdiction. We find that most purported rules of CIL reflect pure coincidence of interest, rather than international cooperation, and that the rest are best explained as the outcome of repeated bilateral prisoner's dilemmas or coercion analogous to the behavior of the monopolist in predatory pricing games. We conclude by examining the implications of our analysis for understanding the role of CIL in domestic constitutional arrangements, the function of international treaties and international organizations, and the status of modern international human rights law.

Abstract:
Standard economic models of contract imply that contracts should be highly "complex," by which we mean (1) rich in the expected number of payoff-relevant contingencies; (2) variable in the magnitude of payoffs contracted to flow between parties; and (3) severe in the cognitive load necessary to understand the contract. Yet most real-world contracts are simple along all three of these dimensions. We argue that many factors, often neglected in the literature, account for this discrepancy. The factors are categorized as asymmetric information, monitoring dynamics, evolutionary pressures, conventions, reliance on trust and reputation, enforcement costs, bounded rationality, and renegotiation. This positive analysis has normative implications for how lawyers draft contracts, and for how courts rely on the form of a contract (specifically, its degree of complexity) in order to interpret it.

Abstract:
This paper ranks the high courts of the fifty states, based on their performance during the years 1998-2000, along three dimensions: opinion quality (or influence as measured by out-of-state citations), independence (or non-partisanship), and productivity (opinions written). We also discuss ways of aggregating these measures. California and Delaware had the most influential courts; Georgia and Mississippi had the most productive courts; and Rhode Island and New York had the most independent courts. If equal weight is given to each measure, then the top five states were: California, Arkansas, North Dakota, Montana, and Ohio. We compare our approach and results with those of other scholars and the U.S. Chamber of Commerce, whose influential rankings are based on surveys of lawyers at big corporations.

state courts, high courts, court performance

Abstract:
The laws of war forbid states to use force against each other except in self-defense or with the authorization of the United Nations Security Council. Self-defense is usually understood to mean self-defense against an imminent threat. We model the decision of states to use force against "rogue" states, and argue that under certain conditions it may be proper to expand the self-defense exception to preemptive self-defense. We also consider related issues such as humanitarian intervention, collective security, and the role of the Security Council.

laws of war, United Nations

Abstract:
Greenhouse gas reductions would cost some nations much more than others, and benefit some nations far less than others. Significant reductions would impose especially large costs on the United States, and recent projections suggest that the United States has relatively less to lose from climate change. In these circumstances, what does justice require the United States to do? Many people believe that the United States is required to reduce its greenhouse gas emissions beyond the point that is justified by its own self-interest, simply because the United States is wealthy, and because the nations most at risk from climate change are poor. This argument from distributive justice is complemented by an argument from corrective justice: The existing "stock" of greenhouse gas emissions owes a great deal to the past actions of the United States, and many people think that the United States should do a great deal to reduce a problem for which it is largely responsible. But there are serious difficulties with both of these arguments. Redistribution from the United States to poor people in poor nations might well be desirable, but if so, expenditures on greenhouse gas reductions are a crude means of producing that redistribution: It would be much better to give cash payments directly to people who are now poor. The argument from corrective justice runs into the standard problems that arise when collectivities, such as nations, are treated as moral agents: Many people who have not acted wrongfully end up being forced to provide a remedy to many people who have not been victimized. The conclusion is that while a suitably designed climate change agreement is in the interest of the world, a widely held view is wrong: Arguments from distributive and corrective justice fail to provide strong justifications for imposing special obligations for greenhouse gas reductions on the United States. These arguments have general implications for thinking about both distributive justice and corrective justice arguments in the context of international law and international agreements.

Abstract:
Law and economics has failed to produce plausible descriptive theories of contract doctrines. This paper documents these failures and suggests that they are due to a methodological problem involving the concept of transaction costs. If transaction costs refer to writing or information costs, then rational individuals would agree to complex contracts that are not in fact observed, and contract law would, for the most part, have no other function than that of specifically enforcing contracts. If transaction costs refer to limits on foreseeability and other cognitive restrictions, then law and economics assumes implausibly both that people are rational enough to allow legal rules to influence their investment and breach decisions, but not rational enough to allow legal rules to influence contractual design. Implications for normative analysis are discussed, and non-economic approaches to contract law are surveyed and criticized.

contract theory

Abstract:
This paper presents a framework for understanding the relationship between rational choice and emotional behavior. Emotions are interpreted as temporary albeit predictable changes in preferences, abilities, and beliefs. People act rationally in anticipation of their own emotional reactions to provocations and other stimuli; they also act rationally when under the influence of emotion. The law needs to take account of both of these effects. The paper discusses (1) the sanction for murders committed under the influence of rage or hate, (2) the treatment of prejudicial evidence such as gory photographs, (3) safety regulation when individuals are subject to fear or dread, (4) contract and judicial remedies when parties become angry at each other, and (5) cost-benefit analysis of projects that provoke emotional responses.

Abstract:
Some international tribunals, such as the Iran-U.S. claims tribunal and the trade dispute panels set up under GATT, are "dependent" in the sense that the judges are appointed by the state parties for the purpose of resolving a particular dispute. If the judges do not please the state parties, they will not be used again. Other international tribunals, such as the International Court of Justice, the Inter-American Court of Human Rights, and the new International Criminal Court, are "independent" in the sense that the judges are appointed in advance of any particular dispute and serve fixed terms. The conventional wisdom, which is based mainly on the European experience, is that independent tribunals are more effective at resolving disputes than dependent tribunals are. We argue that the evidence does not support this view. We also argue that the evidence is more consistent with the contrary thesis: the most successful tribunals are dependent. However, selection effects and other methodological problems render a firm conclusion impossible. We support our argument through an examination of qualitative and quantitative evidence, and we argue that the European Court of Justice is not a good model for international tribunals because it owes its success to the high level of political and economic unification among European states. We conclude with pessimistic predictions about the International Criminal Court, the International Tribunal for the Law of the Sea, and the WTO dispute resolution mechanism, the newest international tribunals.

international adjudication, international arbritration, international law, dispute resolution

Abstract:
Nonprofit firms may not distribute profits to owners but instead must retain them or reinvest them. Nonprofits that are "charitable organizations" under Section 501(c)(3) of the tax code may receive donations from individuals who are allowed to deduct their donations from their income for tax purposes. We argue that the law should not link tax benefits to corporate form in this way. There may be good arguments for recognizing the nonprofit form and good arguments for providing tax subsidies to charities or donors to charities, but there is no good argument for making those tax subsidies available only to charities that adopt the nonprofit form. Consequently, the "for-profit charity" may well be a desirable institution. Currently, no such entity exists, but the reason is surely discriminatory tax treatment; the charitable activities of many commercial firms suggest that in the absence of discriminatory tax treatment for-profit charities would flourish. Current tax benefits for charitable nonprofits should be extended to for-profit charities, and to the charitable activities of for-profit commercial firms.

tax benefits, nonprofits

Abstract:
Although federal judges are appointed with life tenure, most state judges are elected for short terms. Conventional wisdom holds that appointed judges are superior to elected judges because appointed judges are less vulnerable to political pressure. However, there is little empirical evidence for this view. Using a dataset of state high court opinions, we construct objective measures for three aspects of judicial performance: effort, skill and independence. The measures permit a test of the relationship between performance and the four primary methods of state high court judge selection: partisan election, non-partisan election, merit plan, and appointment. The empirical results do not show appointed judges performing at a higher level than their elected counterparts. Appointed judges write higher quality opinions than elected judges do, but elected judges write many more opinions, and the evidence suggests that the large quantity difference makes up for the small quality difference. In addition, elected judges do not appear less independent than appointed judges. The results suggest that elected judges are more focused on providing service to the voters (that is, they behave like politicians), whereas appointed judges are more focused on their long-term legacy as creators of precedent (that is, they behave like professionals).

judiciary, elected judges, appointed judges

Abstract:
This survey of the law and economics of consumer finance discusses economic models of consumer lending, and evaluates the major consumer finance laws in light of them. We focus on usury laws, restrictions on creditor remedies such as the ban on expansive security interests, bankruptcy law, limitations on third-party defenses such as the holder in due course doctrine, information disclosure rules including the Truth in Lending Act, and anti-discrimination law. We also discuss the empirical literature.

Abstract:
Critics of realist and rational choice approaches to international law argue that if nations were motivated entirely by power or self-interest, their leaders would not make moral and legal arguments because no one would believe them. Thus, the prevalence of moral and legal rhetoric on the international stage refutes the behavioral assumptions of realism and rational choice. This paper argues that even if nations are not motivated by a desire to comply with morality or law, the use of moral and legal arguments could occur in equilibrium. Signaling and cheap talk models show that nations may engage in talk in order (1) to deflect suspicion that they have unstable political systems or adversarial interests, and (2) to coordinate when gains from coordination are available. International talk is often moral and legal because the obligational vocabulary of moral and legal dispute between individuals is also useful for purely amoral strategic interactions when cooperation and coordination are involved. The existence of moral and legal rhetoric in international relations is the result of strategic incentives, not of the desire to comply with morality or law.

Abstract:
Internet service providers are today largely immune from liability for their role in the creation and propagation of worms, viruses, and other forms of malicious computer code. In this Essay, we question that state of affairs. Our purpose is not to weigh in on the details - for example, whether liability should sound in negligence or strict liability, or whether liability is in this instance best implemented by statute or via gradual common law development. Rather, our aim is to challenge the recent trend in the courts and Congress away from liability and toward complete immunity for Internet service providers. In our view, such immunity is difficult to defend on policy grounds, and sharply inconsistent with conventional tort law principles. Internet service providers control the gateway through which Internet pests enter and reenter the public computer system. They should therefore bear some responsibility for stopping these pests before they spread and for helping to identify individuals who originate malicious code in the first place.

Tort law, virus, worm, Internet, strict liability, negligence, cyberspace

Abstract:
A recent debate about the Bush administration's use of presidential signing statements has raised questions about their function, legality, and value. We argue that presidential signing statements are legal and that they provide a useful way for the president to disclose his views about the meaning and constitutionality of legislation. Although President Bush has challenged more statutory provisions in signing statements than prior administrations have, his signing statements are similar in many respects to the signing statements issued by prior presidents, such as President Clinton. In addition, basic tenets of positive political theory suggest that signing statements do not undermine the separation of powers or the legislative process and that, under certain circumstances, they can provide relevant evidence of statutory meaning.

Abstract:
Cost-benefit analysis is analyzed using a model of agency delegation. In this model an agency observes the state of the world and issues a regulation, which the president may approve or reject. Cost-benefit analysis enables the president to observe the state of the world (in one version of the model), or is a signal that an agency may issue (in another version). The roles of the courts, Congress, and interest groups are also considered. It is argued that the introduction of cost-benefit analysis increases the amount of regulation, including the amount of regulation that fails cost-benefit analysis; that the president has no incentive to compel agencies to issue cost-benefit analysis, because agencies will do so when it is in the president's interest, and otherwise will not do so; that presidents benefit from cost-benefit analysis even when they do not seek efficient policies; that agencies and their supporters ought to endorse cost-benefit analysis, not resist it; and that cost-benefit analysis reduces the influence of interest groups. Evidence for these claims is discussed. Finally, it is argued that courts should force agencies to conduct cost-benefit analyses in ordinary conditions, but that they should not force agencies to comply with them.

cost-benefit analysis, delegation

Abstract:
Soft law consist of rules issued by law-making bodies that do not comply with procedural formalities necessary to give the rules legal status yet nonetheless may influence the behavior of other law-making bodies and of the public. Soft law has been much discussed in the literatures on international law, constitutional law, and administrative law, yet congressional soft-lawmaking, such as the congressional resolution, has received little attention. Congressional soft law affects behavior by informing the public and political institutions about the intentions and policy preferences of Congress, which are informative about future hard law as well as of Congress's view of the world, and thus relevant to the decision-making of various political agents as well as that of the public. Congressional soft law is important for a range of topics, including statutory interpretation and constitutional development. Other types of soft law - international, constitutional, and judicial - are compared.

soft law, norms

Abstract:
This paper analyzes the voting rules of Chapter 11 using models from noncooperative game theory. Prior work has relied mainly on a model of bargaining between the debtor and a single creditor with perfect information. We expand on this work by considering two-party bargaining with imperfect information, and bargaining (with perfect and imperfect information) among a single debtor and multiple creditors. In addition, prior work has focused on explaining the role of the exclusivity period, the absolute priority rule, and the liquidation floor in Chapter 11 bargaining. We also consider the role of majoritarianism and supermajoritarianism, bicameralism, and classification, and the desirability of allowing creditors to purchase claims from each other.

Abstract:
This paper introduces an informal model of contracting where courts are assumed to be radically incompetent, that is, they are unable to determine whether a party in a contract dispute has engaged in opportunistic behavior (breach), although they can determine whether parties intended to enter a legally enforceable contract. Under this assumption courts cannot perform their normal function in standard economic analysis of contract law, where they deter opportunistic breach because they can verify the promisor's behavior. Nonetheless, the model shows that despite judicial incompetence people will voluntarily enter legally enforceable, jointly valuable contracts. The reason is that when parties care about their reputations, and are engaged in repeated interaction, they can deter certain forms of otherwise profitable opportunism by credibly threatening a mutually destructive lawsuit. The law, on this theory, generates value not by directly deterring bad behavior, but by supplying parties with the ability to retaliate when they are harmed. The paper explores the model's implications for understanding contracting and contract law.

Abstract:
Cost-benefit analysis is routinely used by government agencies in order to evaluate projects, but it remains controversial among academics. The standard defense appeals to the Pareto standard or the Kaldor-Hicks standard, and assumes that agencies should respect people's actual preferences, as opposed to informed or otherwise restricted preferences. This paper argues that cost-benefit analysis is best understood as a welfarist decision procedure, and its most plausible defense is that use of cost-benefit analysis is more likely to maximize overall well-being than is use of alternative decision-procedures. The paper focuses on the problem of using cost-benefit analysis when preferences are "distorted." A person's preferences are distorted when their satisfaction does not enhance that person's well-being. Preferences typically thought to be distorted in this sense include disinterested preferences, uninformed preferences, adaptive preferences, and objectively bad preferences; further, preferences may be a poor guide to maximizing aggregate well-being when wealth is unequally distributed. We argue that government agencies currently recognize these problems but respond to them in an ad hoc way, and that a more systematic treatment of these problems is warranted. The paper describes conditions under which agencies should (or should not) correct for distorted preferences, for example, by constructing informed or non-adaptive preferences, discounting objectively bad preferences, and treating people differentially on the basis of wealth. Institutional and political constraints - the inability of agencies to make lump sum transfers, the need for transparency - are also considered.

Abstract:
The International Court of Justice has jurisdiction over disputes between nations, and has decided dozens of cases since it began operations in 1946. Its defenders argue that the ICJ decides cases impartially and confers legitimacy on the international legal system. Its critics argue that the members of the ICJ vote the interests of the states that appoint them. Prior empirical scholarship is ambiguous. We test the charge of bias using statistical methods. We find strong evidence that (1) judges favor the states that appoint them, and (2) judges favor states whose wealth level is close to that of the judges' own state; and weaker evidence that (3) judges favor states whose political system is similar to that of the judges' own state, and (4) (more weakly) judges favor states whose culture (language and religion) is similar to that of the judges' own state. We find weak or no evidence that judges are influenced by regional and military alignments.

international court of justice, ICJ, international law

Abstract:
Litigation over the effects of climate change has taken various forms, of which litigation based on international human rights law is perhaps the most ambitious. Plaintiffs argue that major emitters of greenhouse gases have violated rights to life and health by contributing to environmental and health injuries associated with global warming. International human rights litigation in international tribunals is unlikely to have any effect, but conceivably American courts might be open to these arguments in Alien Tort Statute litigation. If so, this would be a mistake. Because the health of the global climate is a public good, because American courts have limited ability to control the behavior of corporations on foreign territory, and because optimal climate policy varies greatly across countries, it is unlikely that American courts can provide remedies that are economically sound and politically acceptable.

environment, global warming, human rights, public good

Abstract:
Most academics who have written on coercive interrogation believe that its use is justified in extreme or catastrophic scenarios but that nonetheless it should be illegal. They argue that formal illegality will not prevent justified use of coercive interrogation because government agents will be willing to risk criminal liability and are likely to be pardoned, acquitted, or otherwise forgiven if their behavior is morally justified. This outlaw and forgive approach to coercive interrogation is supposed to prevent coercive interrogation from being applied in inappropriate settings, to be symbolically important, and nonetheless to permit justified coercive interrogation. We argue that the outlaw and forgive approach rests on questionable premises. If coercive interrogation is ever justified, and the benefits outweigh the risks of error and unintended consequences, it should be legal, albeit strictly regulated. The standard institutional justifications for outlaw and forgive - rules/standards problems, slippery slopes, and symbolism - are unpersuasive.

9/11, consequentialism

Abstract:
This essay compares crisis governance and emergency lawmaking after 9/11 and the financial meltdown of 2008. We argue that the two episodes were broadly similar in outline, but importantly different in detail, and we attempt to explain both the similarities and differences. First, broad political processes and constraints operated in both episodes to create a similar pattern of crisis governance, in which Congress delegated large new powers to the executive. We argue that this pattern is best explained by reference to the account of lawmaking in the administrative state offered by Carl Schmitt, as opposed to the standard Madisonian view. Second, within the broad constraints of crisis politics, the Bush administration asserted its authority more aggressively after 9/11 than in the financial crisis. Rejecting competing explanations based on legal differences, the nature of the threat, or other factors, we attribute the difference to the Bush administration's loss of popularity and credibility over the period between 2001 and 2008 and to the more salient and divisive distributive effects of financial management.

Abstract:
The International Court of Justice is the judicial organ of the United Nations and the preeminent international court, but its caseload is light and has declined over the long term relative to the number of states. This paper examines evidence of the ICJ's decline, and analyzes two possible theories for this decline. The first is that states stopped using the ICJ because the judges did not apply the law impartially but favored the interests of their home states. The second is that the ICJ has been the victim of conflicting interests among the states that use and control it.

United Nations

Abstract:
This article uses a signaling model to explain the role of symbols in people's behavior and beliefs, with special attention to legal manipulation of symbols. It is argued that certain actions become symbolic because they have the proper cost structure and because they are, for historical or psychological reasons, focal. The cost structure enables people to obtain advantages by revealing information about themselves in separating equilibria. The focal character of the action removes ambiguities about the motives for engaging in it. The government can in theory use standard legal instruments (which mainly affect the cost of the signal) to change equilibrium behavior and belief. The use of the law in this way is likely to have unpredictable effects because of multiple equilibria and of the sensitivity of behavior to parameters, but it occurs frequently because lobbying and other actions that influence law-making can become signals themselves, and the law is simply an equilibrium outcome. The analysis is used to discuss flag desecration, censorship, voting, and anti-discrimination laws.

Abstract:
This article uses a signaling model to explain the role of symbols in people's behavior and beliefs, with special attention to legal manipulation of symbols. It is argued that certain actions become symbolic because they have the proper cost structure and because they are, for historical or psychological reasons, focal. The cost structure enables people to obtain advantages by revealing information about themselves in separating equilibria. The focal character of the action removes ambiguities about the motives for engaging in it. The government can in theory use standard legal instruments (which mainly affect the cost of the signal) to change equilibrium behavior and belief. The use of the law in this way is likely to have unpredictable effects because of multiple equilibria and of the sensitivity of behavior to parameters, but it occurs frequently because lobbying and other actions that influence law making can become signals themselves, and the law is simply an equilibrium outcome. The analysis is used to discuss flag desecration, censorship, voting, and anti-discrimination laws.

Abstract:
Covenants not to compete (CNCs) are used in employment contracts to prevent employees from working for other employers. The legal enforcement of CNCs varies across jurisdictions in the U.S.: some states ban them (notably, California), while a majority of states enforce CNCs when they reasonably protect a legitimate interest of the employer. The discrepancy in the legal policy regarding CNCs is reflected in an academic debate over the economic efficiency of these covenants. One side argues that CNCs are bad because they restrict labor mobility; the other side argues that the restriction on the movement of workers is good because it prevents workers from appropriating their employers' human capital investments (and CNCs thereby encourage such investment). The paper addresses together the two objectives of ex post (labor mobility) and ex ante (human capital investment) efficiency. It compares CNCs with the the alternative contract breach remedies of specific performance and liquidated damages. A given CNC may be analyzed as a hybrid that adopts specific performance with respect to attempted movements to employers within its scope and liquidated damages equal to zero with respect to movements outside its scope. Among the results of the paper is the finding that, where a CNC can be renegotiated, first-best performance and first-best investment can be induced. The appropriate choice of the CNC scope can balance perfectly the overinvestment tendency of specific performance against the underinvestment effect caused by zero liquidated damages. Contracting parties, however, have the incentive to agree to excessively broad CNCs that enable them to extract rents from prospective new employers within the CNC scope. The law should be wary of this incentive in policing CNCs.

Covenant not to compete, employment, exclusive contracts

Abstract:
The rise of China raises questions about the future of international law. The current system of international law depends largely on American hegemony, along with the dominance of western European states that share America's general goals and values. It is possible that China in the future will not threaten this system, either because China comes to share these goals and values or because China breaks apart. But the more likely scenario is that China will compete with the U.S. for regional and then global influence. We argue that in such a world the current system of international law will not be viable, and that future international law will resemble either the nineteenth century balance of powers system, or the cold war bipolar system.

Abstract:
Human rights treaties play an important role in international relations but they lack a foundation in moral philosophy and doubts have been raised about their effectiveness for constraining states. Drawing on ideas from the literature on economic development, this paper argues that international concern should be focused on human welfare rather than on human rights. A focus on welfare has three advantages. First, the proposition that governments should advance the welfare of their populations enjoys broader international and philosophical support than do the various rights that are incorporated in the human rights treaties. Second, the human rights treaties are both too rigid and too vague - they do not allow governments to adopt reasonable policies that advance welfare at the expense of rights, and they do not set forth rules governing how states may trade off rights. A welfare treaty could provide guidance by supplying a maximand along with verifiable measures of compliance. Third, the human rights regime and international development policy work at cross-purposes. Development policy favors the poorest states, while the human rights regime condemns the states with the worst governments: unfortunately, the poorest states usually have the worst governments. Various possible welfare treaties are surveyed.

treaties, international relations

Abstract:
This essay replies to criticisms advanced at a conference on our book, The Limits of International Law. We engage the critics on several methodological issues, we attempt to correct misimpressions about some of our arguments, and we reiterate our distinctive empirical claims. We also argue that our critics have more in common with us, and less in common with traditional international law scholars, than they are willing to admit. This observation leads us to claim that a new kind of international law scholarship is emerging, one that relies more heavily on social scientific attitudes and methodologies than the international law scholarship that it is gradually displacing. This trend fills us with optimism about the field, but at the same time we predict, with some misgiving, that much future scholarship will be preoccupied with reconciling the traditional liberal internationalism of the international law academy and the new imperative to use rigorous social scientific methods.

Abstract:
Nearly everyone thinks that judges are underpaid, but theory and evidence provide little support for this view. Theory suggests that increasing judicial salaries will improve judicial performance only if judges can be sanctioned for performing inadequately or if the appointments process reliably screens out low-ability candidates. However, federal judges and many state judges cannot be sanctioned, and the reliability of screening processes is open to question. An empirical study of the high court judges of the 50 states provides little evidence that raising salaries would improve judicial performance. The case for a pay raise has not been made.

Abstract:
The international law of state responsibility determines when states are liable for international law violations. States are generally liable when they have control over the actions of wrongdoers; thus, the actions of state officials can implicate state responsibility whereas the acts of private citizens usually do not. We argue that the rules of state responsibility have an economic logic similar to that of vicarious liability in domestic law: the law in both cases provides third parties with incentives to control the behavior of wrongdoers whom they can monitor and influence. We also discuss international legal remedies and individual liability under international criminal law.

Abstract:
The international law of state responsibility determines when states are liable for international law violations. States are generally liable when they have control over the actions of wrongdoers; thus, the actions of state officials can implicate state responsibility whereas the acts of private citizens usually do not. We argue that the rules of state responsibility have an economic logic similar to that of vicarious liability in domestic law: the law in both cases provides third parties with incentives to control the behavior of wrongdoers whom they can monitor and influence. We also discuss international legal remedies and individual liability under international criminal law.

Abstract:
In an influential article, Ian Ayres and Robert Gertner introduced the concept of the "penalty default rule," a rule that fills a gap in an incomplete contract with a term that would not be chosen by a majority of parties similarly situated to the parties to the contract in question. Ayres and Gertner argued that such a rule might be efficient in a model in which contracting parties have asymmetric information. However, Ayres and Gertner did not provide any persuasive examples of penalty default rules; their best example is the Hadley rule, but this rule is probably not a penalty default rule. It turns out that there are no plausible examples of penalty default rules that solve the information asymmetry problem identified by Ayres and Gertner. The penalty default rule is a theoretical curiosity that has no existence in contract doctrine.

Abstract:
A growing body of research on happiness or subjective well-being shows, among other things, that people adapt to many injuries more rapidly than is commonly thought, fail to predict the degree of adaptation and hence overestimate the impact of those injuries on their well-being, and, similarly, enjoy small or moderate rather than significant changes in well-being in response to significant changes in income. Some researchers believe that these findings pose a challenge to cost-benefit analysis, and argue that project evaluation decision-procedures based on economic premises should be replaced with procedures that directly maximize subjective well-being. This view turns out to be wrong or, at best, premature. Cost-benefit analysis remains a viable decision-procedure. However, some of the findings in the happiness literature can be used to generate valuations for cost-benefit analysis where current approaches have proven inadequate.

happiness, subjective well-being, SWB, cost-benefit analysis, CBA, social welfare

Abstract:
A constitutional showdown is a disagreement between branches of government about their constitutional powers that ends in the total or partial acquiescence by one branch in the views of the other and that creates a constitutional precedent. Standard examples of showdowns include disputes over executive privilege, war-making and -funding, and court-packing. Showdowns are costly because they interfere with the normal operation of government, but they also produce important and overlooked benefits. They are an important mechanism of constitutional development, and, among other things, clarify the lines of constitutional authority. We tote up the costs and benefits of constitutional showdowns, show their continuity with other legal phenomena, and criticize the prevailing wisdom that government agents should avoid them as much as possible.

Abstract:
This paper examines the effect of tort rules on behavior if people are optimistic or insensitive relative to true probabilities. The paper shows that under certain conditions both strict liability and negligence cause levels of care that are higher than, or equal to, what is efficient (rather than lower). The paper also shows that under certain conditions strict liability and negligence cause the same level of activity among optimists (more than is efficient). Other implications for tort law are discussed, as are the sensitivity of the results to the choice of how to model probability errors. Implications for contract law, and some normative issues, are also discussed.

tort, contract law, normative issues

Abstract:
The housing crisis threatens to destroy hundreds of billions of dollars of value by causing homeowners with negative equity to walk away from their houses. A house in foreclosure is worth 30 to 50 percent less than a house that a homeowner either retains or sells on the market, and a foreclosed house damages neighboring property values as well. We advocate a reform of Chapter 13 that would allow homeowners to strip down the value of their mortgages in a prepackaged bankruptcy. Such a plan would give homeowners an incentive to keep or resell their homes, thus reducing the market value loss of homes while protecting the effective value of creditors' interests. Two further key elements of the plan are that it uses prices based on the average house price in a particular ZIP code, which reduces moral hazard; and it is automated, requiring only a rubber stamp by a bankruptcy judge or other official, thus preserving judicial resources. Other plans, including that of the Obama administration, are compared.

Housing, banking, chapter 13

Abstract:
The laws of war govern the weapons and tactics that belligerents may use against each other. This paper uses a model of conflict to explain and evaluate the laws of war. In the model a nation's propensity to engage in conflict is a positive function of the effectiveness of military technology, and a negative function of the destructiveness of technology. Accordingly, in theory nations would want to agree to laws of war that permit destructive weapons and tactics but limit their effectiveness. However, nations with different endowments and resources will enjoy differential advantages, and this makes agreement on specific laws of war very difficult. The paper discusses empirical implications of the argument, and discusses whether the Hague Conventions are consistent with the model.

Abstract:
Administrative regulations and tort law both impose controls on activities that cause mortality risks, but they do so in puzzlingly different ways. Under a relatively new and still-controversial procedure, administrative regulations rely on a fixed value of a statistical life representing the hedonic loss from death. Under much older law, tort law in most states excludes hedonic loss from the calculation of damages, and instead focuses on loss of income, which regulatory policy ignores. Regulatory policy also disregards losses to dependents; tort law usually allows dependents to recover for loss of support. Regulatory policy generally treats the loss of the life of a child as equivalent to the loss of the life of an adult; tort law usually treats the loss of the life of a child as less valuable. Regulatory policy implicitly values foreigners as equal to Americans; tort law does not. We argue that both areas of law make serious mistakes in valuing life and that each should learn from the other. Regulatory policy properly focuses on hedonic loss from death, and tort law should adopt this approach. But regulatory policy should imitate tort law's individualized approach to valuing the loss from death, including its inclusion of losses to dependents. If these changes were made, tort awards would be more uniform and predictable, and regulations would be less uniform and more stringent. In addition, average tort damages for wrongful death would be at least twice as high as they are today. With respect to dollar judgments for mortality risks, a pervasive issue is how to combine accuracy with administrability and predictability; both bodies of law could do far better on this score.

mortality, risk, administrative regulations, hedonic loss, damages, dollar judgments

Abstract:
In Boumediene v. Bush, the Supreme Court held that noncitizens detained at Guantanamo Bay have the constitutional privilege of habeas corpus. The case can be given multiple interpretations, including a narrow reading under which it follows straightforwardly from Eisentrager. But Justice Kennedy's majority opinion omits consideration of a factor that plays a role in Eisentrager, namely, the limited constitutional status of the noncitizen. For this reason, the most distinctive element of Justice Kennedy's reasoning is its cosmopolitanism, not its libertarianism. The cosmopolitan elements of Boumediene recall the debate about the use of foreign law to interpret provisions of the U.S. Constitution, of which Justice Kennedy is a major proponent, and it is argued that critics of judicial cosmopolitanism should reject Boumediene as well.

Abstract:
There are two main views about the proper role of the Constitution during national emergencies. We label them the "accommodation" view and the "strict" view. The accommodation view holds that the Constitution should be relaxed or suspended during an emergency. The strict view holds that constitutional rules are not, and should not be, relaxed during an emergency. The Constitution should be enforced "strictly" so that both civil liberties and government interests, such as national security, can be appropriately balanced.

In this paper we critique the strict view. Defenders of the strict view have proposed two major rationales for their position. The first is institutional: emergencies work like a ratchet, so that constitutional protections are reduced in emergencies, while after the emergency is over the enhancement of constitutional powers is either maintained, or not fully eliminated. The second rationale is psychological: during an emergency, people panic, and when they panic they support policies that are unwise and excessive. Relaxation of constitutional protections would give free rein to the panicked reaction, when what is needed is constraint.

The ratchet theory and the panic theory have become fixed points in the debate about emergency powers, yet have escaped rigorous analysis. As we will show, both theories suffer from insuperable conceptual, normative, and empirical difficulties. The ratchet theory lacks a mechanism that permits constitutional powers to rise and prevents them from falling, and makes implausible assumptions about the rationality of individuals who consent to constitutional changes during emergencies. The panic theory assumes that people can, while panicked, get outside themselves and constrain their own fear. Although people and officials panic, we have found little evidence that constitutions or other laws or institutions can control the panic, and cause people to lose their fear, or else choose, while panicked, laws that they would choose if they were not panicked. Finally, defenders of either theory do not examine their normative premises sufficiently: it is not clear that panics and ratchets, if they occur, are bad.

constitutional law, national emergencies, "ratchet theory," "panic theory"

Abstract:
Judge Sonia Sotomayor’s assertion that female judges might be “better” than male judges has generated accusations of sexism and potential bias. An equally controversial claim is that male judges are better than female judges because the latter have benefited from affirmative action. These claims are susceptible to empirical analysis. Primarily using a dataset of all the state high court judges in 1998-2000, we estimate three measures of judicial output: opinion production, outside state citations, and co-partisan disagreements. We find that the male and female judges perform at about the same level. Roughly similar findings show up in data from the U.S. Court of Appeals and the federal district courts.

judicial performance, gender, citations, judges

Abstract:
The maxim “divide and conquer” (divide et impera) is invoked frequently in law, history, and politics, but often in a loose or undertheorized way. We suggest that the maxim is a placeholder for a complex of ideas related by a family resemblance, but differing in their details, mechanisms and implications. We provide an analytic taxonomy of divide and conquer mechanisms in the settings of a Stag Hunt Game and an indefinitely-repeated Prisoners’ Dilemma. A number of applications are considered, including labor law, bankruptcy, constitutional design and the separation of powers, imperialism and race relations, international law, litigation and settlement, and antitrust law. Conditions under which divide and conquer strategies reduce or enhance social welfare, and techniques that policy makers can use to combat divide and conquer tactics, are also discussed.

Abstract:
A promisor is strictly liable for breaching a contract, according to the standard account. However, some cases and doctrines appear to recognize that a promisor will not be liable, or will face reduced damages, if the breach was the result of inadvertence rather than fault or willfulness. A negligence-based system of contract law can be given an economic interpretation, and it is shown that such a system is in some respects more attractive than the strict-liability system.

liability, breach of contract

Abstract:
Legal and constitutional theory has focused chiefly on the risk that voters and legislators will trust an ill-motivated executive. This paper addresses the risk that voters and legislators will fail to trust a well-motivated executive. Absent some credible signal of benign motivations, voters will be unable to distinguish good from bad executives and will thus withhold discretion that they would have preferred to grant, making all concerned worse off. We suggest several mechanisms with which a well-motivated executive can credibly signal his type, including independent commissions within the executive branch; bipartisanship in appointments to the executive branch, or more broadly the creation of domestic coalitions of the willing; the related tactic of counter-partisanship, or choosing policies that run against the preferences of the president's own party; commitments to multilateral action in foreign policy; increasing the transparency of the executive's decisionmaking processes; and a regime of strict liability for executive abuses. We explain the conditions under which these mechanisms succeed or fail, with historical examples.

Abstract:
A number of judge-made doctrines attempt to promote international comity by reducing possible tensions between the United States and foreign sovereigns. For example, ambiguous statutes are usually interpreted to conform to international law, and statutes are usually not understood to apply outside of the nation's territorial boundaries. The international comity doctrines are best understood as a product of a judicial judgment that in various settings, the cost of American deference to foreign interests is less than the benefits to American interests. Sometimes Congress balances these considerations and incorporates its judgment in a statute, but usually it does not. In such cases, executive interpretations should be permitted to trump the comity doctrines. This conclusion is supported both by considerations of institutional competence and by the distinctive position of the President in the domain of foreign affairs. It follows that if the executive wants to interpret ambiguous statutes so as to apply extraterritorially, or so as to conflict with international law, it should be permitted to do so. The analysis of the interpretive power of the executive follows by reference to the Chevron doctrine in administrative law, which similarly calls for deference to executive interpretation of statutory ambiguities. Sometimes the Chevron doctrine literally applies to such interpretation; sometimes it operates as a valuable analogy.

Chevron, international law

Abstract:
Recent empirical scholarship that shows that judges decide cases in a manner that is consistent with their political biases has motivated a stream of proposals for reform, including judicial term limits, limitations on judicial review of statutes and agency actions, revision of the judicial appointments process, and mandatory mixed party representation on judicial panels. However, these proposals incorrectly assume that judicial bias is necessarily harmful, and do not fully consider the costs to other values even when reduction of judicial bias is justified. To evaluate proposals for reform, one needs a theory of judicial review, one that explains how bias and other characteristics of judicial behavior result in socially good or bad outcomes. This paper supplies such a theory, drawing on rational-choice accounts of the role of the judiciary in the legislative process. It argues that judicial bias is not harmful in a broad range of circumstances, and that the merits of the reform proposals depend on many factors, including, among others, the degree of supermajoritarianism of the legislative process, the magnitude of legislative bargaining costs, judicial competence, and the extent to which the judicial appointments process and party competition result in an ideologically diverse judiciary.

Abstract:
Exemption laws enable people who default on loans to protect certain assets from liquidation, both inside and outside bankruptcy. Every state has its own set of exemption laws, and they vary widely; the federal bankruptcy law also establishes a set of exemptions, which debtors in bankruptcy are permitted to use instead of their state's exemptions unless the state has formally "opted out" of the federal system. We test a wide range of public interest and public choice explanations for exemption laws, using a data set consisting of the exemption laws in all states over twenty-two years, and also exploiting the opt out choice of the different states. We find that states are more likely to opt out, and to increase their exemptions in the process, if they are conservative, start with low exemptions, and have a high bankruptcy filing rate. We find little evidence for popular theories of exemptions levels; the most important factor correlated with exemption level is the historical generosity of a state's exemption laws.

Bankruptcy, exemption laws, credit, opt out laws

Abstract:
Cultural property is subject to two international legal regimes, one of which protects cultural property during wartime, and the other of which regulates the international trade in cultural property. Neither legal regime has been notably successful. Cultural property is often targeted and destroyed during wars, or given inadequate protection. And the international trade in cultural property flourishes because states have been unwilling to invest resources in controlling it. As a result, scholars and advocates argue that both legal regimes should be strengthened. Sanctions should be enhanced; states should be forced to devote greater resources to complying with treaties; treaty obligations should be made stricter and more detailed; and states that have not ratified the existing treaties should be pressured to do so. These proposals are, however, unwise. Cultural property is, in most ways, just like ordinary property, and existing laws and practices that govern the treatment of ordinary property should apply to cultural property as well. The distinctive features of cultural property do not justify the existing treaty regimes or proposals to strengthen them.

Abstract:
Immigration law concerns both first-order issues about the number and types of immigrants who should be admitted into a country and second-order design issues concerning the legal rules and institutions that are used to implement those first-order policy goals. The literature has focused on the first set of issues and largely neglected the second. In fact, many current controversies concern the design issues. This paper addresses the second-order dimension and argues that a central design choice all states face is whether to evaluate potential immigrants on the basis of pre-entry characteristics (the ex ante approach) or post-entry conduct (the ex-post approach). The ex-post system provides more information and thus results in more accurate screening than does the ex-ante system, but it also may deter risk-averse applicants from making country-specific investments that benefit the host country. Focusing on this important tradeoff for states, as well as other costs and benefits of the two screening regimes, the paper evaluates America's reliance on an illegal immigration system, the growth in ex-post screening during the twentieth century, and other important features of immigration law.

Abstract:
Most scholars believe that courts should enforce government contracts, though they disagree about the extent to which liability or damages rules should trade off relevant considerations - the problem of governments holding up contractors, on the one hand, and the problem of governments using contracts in order to defer costs to future governments, on the other hand. These scholars, however, overestimate the ability of courts to affect policy outcomes. Courts cannot increase the welfare of current or future generations by enforcing government contracts. The reason is that enforcing contracts can benefit future generations only by increasing the credibility of their governments, but if the current government has not already tried to benefit future generations by complying with contracts voluntarily, then it will offset the effect of an adverse judgment by withdrawing value from the future using a policy instrument over which courts have no control.

Government contracts

Abstract:
Recent scholarship on regulatory oversight has focused on cost-benefit analysis of prescriptive regulations - regulations that restrict behavior such as pollution - and their use to cure market failures, and has overlooked the vast number of transfer regulations. Transfer regulations are regulations that channel funds to beneficiaries. These regulations are authorized by statutes that establish entitlement programs like Medicare and Social Security, pay one-time distributions to victims of misfortunes such as natural disasters and the 9/11 terrorist attack, and fund pork barrel spending. Cost-benefit analysis cannot be used to evaluate transfer regulations because all transfer regulations fail cost-benefit analysis, but cost-effectiveness analysis can be used to evaluate transfer regulation. Although executive orders appear to require agencies to use cost-effectiveness analysis to evaluate transfer regulations that have a large economic impact, the agencies' record is dismal. Most agencies fail to perform cost-effectiveness analysis, and other agencies perform cost-effectiveness analysis incorrectly. More vigorous OMB and, possibly, judicial review could improve the quality of distributive regulations.

cost-effectiveness analysis, regulation

Abstract:
Many people believe that the problem of climate change would be best handled by an international agreement that includes a system of cap and trade. Such a system would impose a global cap on greenhouse gases emissions and allocate tradable emissions permits. This proposal raises a crucial but insufficiently explored question: How should such permits be allocated? It is tempting to suggest that in principle, allocation should be done on a per capita basis, with the idea that each person should begin with the same entitlement, regardless of place of birth. This idea, pressed by many analysts and by the developing world, can be defended on grounds of either welfare or fairness. But on both grounds, per capita allocations run into serious objections. If fairness is understood in terms of equally or proportionally sharing the burdens of a climate treaty, per capita allocations are not fair because they do not take into account all the effects of such a treaty. Any agreement to reduce greenhouse gas emissions will give more benefits to some nations than to others, and will impose more costs on some nations than on others; in these circumstances, per capita emissions rights give the appearance but not the reality of fairness. For those who seek redistribution to those who need help, on grounds of either welfare or fairness, per capita allocations of emissions rights are at best a mixed blessing. Some rich nations are highly populated, and some poor nations have small populations; there is essentially no relationship between size of population and per capita wealth. Per capita allocations would also create serious incentive problems, and they would face decisive objections from the standpoint of feasibility: Per capita rights would transfer hundreds of billions of dollars annually from the United States to China and India, and the United States is most unlikely to sign a treaty with that consequence. Comparisons are drawn between per capita allocations and other approaches, including those based on existing emissions rates and those with self-conscious redistributive aims. A general goal is to balance welfarist and fairness goals with feasibility constraints; per capita allocations do a poor job of achieving that balance, and an insistence on that approach might make the climate change problem intractable. These conclusions have general implications for thinking about normative goals and practical limitations in the context of international law.

climate change, distribution, emissions rates, international law

Abstract:
This paper evaluates international law from a welfarist perspective. Global welfarism requires that international law advance the well being of everyone in the world, and scholars influenced by global welfarism and similar cosmopolitan principles have advocated radical restructuring of international law. But global welfarism is subject to several constraints, including (1) heterogeneity of preferences of the world population, which produces the state system; (2) agency costs, which produce imperfect governments; and (3) the problem of collective action. These constraints place limits on what policies motivated by global welfarism can achieve, and explain some broad features of international law that otherwise remain puzzling. These features include the central place of state sovereignty in international law despite the moral arbitrariness of borders; the weakness of multilateral treaties; the limited role of individual liability in international law; the predominantly legislative nature of international institutions and the weakness of executive and judicial institutions; and the absence of redistributive obligations in international law.

Abstract:
Due process protections and other constitutional restrictions normally ensure that citizens cannot be tried and punished for political dissent, but these same restrictions interfere with criminal convictions of terrorists and others who pose a non-immediate but real threat to public safety. To counter these threats, governments may use various subterfuges to avoid constitutional protections, often with the complicity of judges, but when they do so, they risk losing the confidence of the public, which may believe that the government targets legitimate political opponents. This paper argues that the amount of process enjoyed by defendants in criminal trials reflects a balancing of these two factors: their dangerousness, on the one hand, and the risk to legitimate political competition, on the other hand. Political trials are those in which the defendant's opposition to the existing government or the constitutional order is the main issue. The paper discusses various ways in which governments and judges adjust process protections, so that a public threat can be countered while the risks to political competition are minimized. International trials are also discussed within this framework.

Abstract:
Erga omnes norms are those that give third-party states, rather than just the victim, legal claims against states that violate them. This paper argues that ordinary two-party norms arise when states recognize that a norm violation injures only one state and that other states that seek to retaliate on that state's behalf are likely using the violation as a pretext for predatory behavior. Erga omnes norms arise when states recognize that a norm violation injures multiple states and that states have an incentive to free ride rather than retaliate against the violator. Erga omnes norms reduce the incentive to free ride but at the same time reintroduce the risk that some states will use a norm violation as a pretext for engaging in predatory behavior.

Abstract:
This response to Nicholas Quinn Rosenkranz's critique of our earlier paper, "The Law of Other States," argues that although Rosenkranz has much of interest to say about Condorcet's influence on the founders, Condorcet's influence, or lack of influence, does not bear on the question of whether the Condorcet Jury Theorem provides a reason for courts to use foreign law and judicial decisions as relevant information for deciding cases.

Abstract:
Constitutional and legislative restrictions on the timing of legislation and regulation are ubiquitous but these timing rules have received little attention in the legal literature. Yet the timing of a law can be just as important as its content. The timing of a law determines whether its benefits are created sooner or later, and how the costs and benefits are spread across time, and hence to the advantage and disadvantage of different private groups, citizens, and elected officials. We argue that timing rules are, and should be, used to reduce agency problems within the legislature and between the legislature and the public, and to mitigate deliberative pathologies.

constitutional restrictions, legislative restrictions, legislative timing, legislative regulation

Abstract:
Defenders of the odious debt doctrine, which bars creditors from collecting sovereign debts that financed the personal consumption of former dictators, argue that this rule would benefit populations following dictatorships and discourage would-be dictators from staging coups in the first place. We show that optimism about the doctrine is based on unrealistic assumptions about the motives and practices of dictators. With more realistic assumptions, the odious debt doctrine could be beneficial or harmful, depending on circumstances. Defenders of the doctrine have not made the empirical case that the net benefits would be positive if the doctrine were incorporated into international law, and there is ample reason for skepticism that they would be.

Abstract:
Critics of emergency measures such as the U.S. government's response to 9/11 invoke the Carolene Products framework, which directs courts to apply strict scrutiny to laws and executive actions that target political or ethnic minorities. The critics suggest that such laws and actions are usually the product of democratic failure, and are especially likely to be so during emergencies. However, the application of the Carolene Products framework to emergencies is questionable. Democratic failure is no more likely during emergencies than during normal times, and courts are in a worse position to correct democratic failures during emergencies than during normal times. The related arguments that during emergencies courts should protect aliens, and should be more skeptical of unilateral executive actions than of actions that are authorized by statutes, are also of doubtful validity.

Emergencies, democracy, civil liberties, judicial review, terrorism, national security

Abstract:
Treaties are the primary source of international law. But little is known about which countries enter into treaties, which forms the treaties take, and which subjects they address. We present an exploratory analysis of a unique dataset of roughly 50,000 treaties ratified since 1946. We hypothesize that states enter treaties in order to obtain public goods but that the transaction costs of negotiating and enforcing treaties also limit the value of treaties. Simple predictions are that larger and richer states should benefit more from cooperation: therefore, they should be parties to more treaties. Older, less corrupt, and (again) larger states should face lower transaction costs and should belong to more treaties. Consistent with this prediction, these states enter into more bilateral treaties and "closed" multilateral treaties, but universal multilateral treaties where the benefits of cooperation are more attenuated and the costs of negotiation are low for small states.

Abstract:
Administrative regulations and tort law both impose controls on activities that cause mortality risks, but they do so in puzzlingly different ways. Under a relatively new and still-controversial procedure, administrative regulations rely on a fixed value of a statistical life representing the hedonic loss from death. Under much older law, tort law in most states excludes hedonic loss from the calculation of damages, and instead focuses on loss of income, which regulatory policy ignores. Regulatory policy also disregards losses to dependents; tort law usually allows dependents to recover for loss of support. Regulatory policy generally treats the loss of the life of a child as equivalent to the loss of the life of an adult; tort law usually treats the loss of the life of a child as less valuable. Regulatory policy implicitly values foreigners as equal to Americans; tort law does not. We argue that both areas of law make serious mistakes in valuing life and that each should learn from the other. Regulatory policy properly focuses on hedonic loss from death, and tort law should adopt this approach. But regulatory policy should imitate tort law's individualized approach to valuing the loss from death, including its inclusion of losses to dependents. If these changes were made, tort awards would be more uniform and predictable, and regulations would be less uniform and more stringent. In addition, average tort damages for wrongful death would be at least twice as high as they are today. With respect to dollar judgments for mortality risks, a pervasive issue is how to combine accuracy with administrability and predictability; both bodies of law could do far better on this score.

statistical life, tort law, regulatory policy, dependents

Abstract:
Professor Gary Lawson has written an illuminating response to our book, Terror in the Balance: "Security, Liberty and the Courts" (Oxford University Press 2007). Lawson's main thesis is that the original understanding of the Constitution supports what we call the judicial deference thesis - that courts should defer to the executive and legislative branches during emergencies. In this brief reply, we offer three claims. First, we express skepticism about whether there can be an overlapping consensus between originalists and nonoriginalists about judicial deference in times of crisis. Second, we affirmatively argue that if originalist adjudication is at all justified by reference to its consequences, then judges should be less originalist in emergencies than in normal times. Third, judges should also be less Burkean or traditionalist during emergencies than in normal times.

Abstract:
Why do states provide migrants rights associated with citizenship? Existing accounts typically answer this question in terms of obligation - of a duty on the part of states to confer citizenship. Moreover, scholars tend to lump together the bundle of rights conventionally associated with citizenship when they answer this question. In contrast, this Article disaggregates the rights associated with citizenship, asks what both states and migrants want, and inquires into how the suite of rights associated with citizenship might advance those interests. States want to encourage migrants to enter their territory and to make country-specific investments, but have an interest in being able to remove immigrants or make their lives less comfortable if circumstances change. However, migrants will not enter and make country-specific investments if the state can easily remove them or change the conditions in which they live. Accordingly, the "optimal contract" reflects the trade-offs between commitment and flexibility. We discuss ways in which basic rights to liberty and property, political rights including voting, and other rights may embody the optimal contract in different circumstances.

migration, immigrants' rights, contract theory, precommitment, immigrant voting

Abstract:
Feasibility analysis, a method of evaluating government regulations, has emerged as the major alternative to cost-benefit analysis. Although regulatory agencies have used feasibility analysis (in some contexts called 'technology-based' analysis) longer than cost-benefit analysis, feasibility analysis has received far less attention in the scholarly literature. In recent years, however, critics of cost-benefit analysis have offered feasibility analysis as a superior alternative. We advance the debate by uncovering the analytic structure of feasibility analysis and its normative premises, and then criticizing them. Our account builds on two examples of feasibility analysis, one conducted by OSHA and the other by EPA. We find that feasibility analysis leads to both under- and over-regulation, and we conclude that it lacks a normative justification and should have no place in government regulation.

Abstract:
Tyrannophobia - the fear of dictatorship - is a dominant theme in American political discourse. Yet dictatorship has never existed in the United States or even been likely.The hypothesis that tyrannophobia itself has prevented dictatorship from occurring is implausible; better evidence exists for alternative hypotheses. We conclude that tyrannophobia is an irrational political attitude that has interfered with, and continues to interfere with, needed institutional reform.

executive power, democracy, dictatorship

Abstract:
Judge Frank Easterbrook’s opinion in ProCD v. Zeidenberg has been heavily criticized for ignoring the law and making unrealistic assumptions about the ability of consumers to read and understand contract terms. This contribution to a symposium on Judge Easterbrook’s judicial output argues that the opinion is a classic example of the manipulation of legal doctrine to advance a policy goal - here, enabling sellers to communicate contract terms when buyers’ time and attention are limited. Contrary to the conventional wisdom, Judge Easterbrook implicitly assumes that buyers are fallible, not hyperrational; his doctrinal solution persuasively addresses the problem of cognitive overload while endorsing a valuable business tool - the “terms later” or “rolling” contract - that reduces the cost of transacting.

Frank Easterbrook

Abstract:
When a federal regulatory agency issues a major regulation, the agency usually must provide an analysis of the anticipated costs and monetized benefits. Yet there is a large category of regulations that has escaped such scrutiny: so-called "transfer" regulations that determine how money and other benefits are distributed to statutory beneficiaries. This is unfortunate because cost-effectiveness analysis can offer insight into whether the programs are having the desired effect and whether they can be improved.

Regulations, cost-effectiveness, analysis, transfer costs, cost-benefit analysis, policy analysis, transfer regulations

Abstract:
This article investigates considerations of distributive and corrective justice in the context of climate change policy. The authors accept that there is good reason for greenhouse gas emissions restrictions, but those reasons do not include concerns about distributive and corrective justice. It is unclear that those restrictions are the best way to help the most disadvantaged people in the world, and climate change does not fit the standard conception of tort.

global warming, climate change policy, greenhouse gas emissions, restrictions, corrective justice, tort, policy, altruism, redistributive effects

Abstract:
The public debate over the need to raise judicial salaries has been one-sided. Sentiment appears to be that judges are underpaid. But neither theory nor evidence provides much support for this view. The primary argument being made in favor of a pay increase is that it will raise the quality of judging. Theory suggests that increasing judicial salaries will improve judicial performance only if judges can be sanctioned for performing inadequately or if the appointments process reliably screens out low-ability candidates. However, federal judges and many state judges cannot be sanctioned, and the reliability of screening processes is open to question. An empirical study of the high court judges of the fifty states provides little evidence that raising salaries would improve judicial performance.

judges, judicial salaries

Abstract:
This survey of the law and economics of consumer finance discusses economic models of consumer lending and evaluates the major consumer finance laws in light of them. We focus on usury laws; restrictions on creditor remedies, such as the ban on expansive security interests; bankruptcy law; limitations on third-party defenses, such as the holder-in-due-course doctrine; information disclosure rules, including the Truth in Lending Act; and antidiscrimination law. We also discuss the empirical literature.

Abstract:
The housing crisis threatens to destroy hundreds of billions of dollars of value by causing homeowners with negative equity to walk away from their houses. A house in foreclosure is worth 30 to 50 percent less than a house that a homeowner either retains or sells on the market, and a foreclosed house damages neighboring property values as well. We advocate a reform of Chapter 13 that would allow homeowners to strip down the value of their mortgages in a prepackaged bankruptcy. Such a plan would give homeowners an incentive to keep or resell their homes, thus reducing the market value loss of homes while protecting the effective value of creditors' interests. Two further key elements of the plan are that it uses prices based on the average house price in a particular ZIP code, which reduces moral hazard; and it is automated, requiring only a rubber stamp by a bankruptcy judge or other official, thus preserving judicial resources. Other plans, including that of the Obama administration, are compared.

bankruptcy, chapter 13, housing

Abstract:
This book provides a systematic account of CBA as a welfarist decision procedure. We reject the traditional defense of CBA in terms of Kaldor-Hicks efficiency, and argue instead that CBA is a workable proxy for overall well-being. We also modify the preference-based account of well-being to which CBA is traditionally linked, and argue that preferences need to be self-interested and fully-informed to produce welfare. This view has many implications for the actual practice of CBA.

Chapter 1 summarizes and rejects traditional defenses of CBA. Chapter 2 provides the foundations for a new defense. It argues that that preferences must be idealized and self-interested to produce welfare; that interpersonal welfare comparisons are possible; and that overall well-being is morally relevant, if not morally decisive. Chapters 3 and 4 compare CBA with alternative administrative decision-procedures - such as intuitive balancing, safety-maximizing procedures, "feasibility" analysis, and others - and argue that CBA is the welfare-maximizing procedure, given decision costs, accuracy, and the political realities of the administrative state. Chapter 5 discusses possible modifications in the practice of CBA that flow from our account, such as the "laundering" of preferences, the rejection of environmental "existence values," and the use of distributional weights. Chapter 6 responds to standard objections to CBA, involving its insensitivity to rights and distribution; incommensurability; the discounting of future benefits and costs; the WTP/WTA disparity; and the valuation of human life. In considering these objections, it is important to understand that CBA is not itself a bedrock moral criterion, nor a superprocedure, but simply a practicable tool to implement one part of the moral bedrock - overall well-being.

Abstract:
Theorists of transitional justice study the transition measures used, or eschewed, by new democracies that succeed communist or authoritarian regimes - measures including trials, purges, lustration, reparations, and truth commissions. The theorists tend to oppose transitional measures, portraying them as illiberal and as a distraction from the task of consolidating new democracies. In this Article we argue against that view. The critics of transitional justice have gone wrong by overlooking that transitional measures are common in consolidated legal systems, which themselves constantly undergo political and economic shocks resulting in transitions of greater or lesser degree. Ordinary justice has developed a range of pragmatic tools for managing transitions. Consolidated democracies use trials, purges and reparations to accomplish valuable forward-looking goals without allowing illiberal repression; new democracies can and should use those tools also. Because transitional justice is continuous with ordinary justice, there is no reason to treat transitional-justice measures as presumptively suspect, on either moral or institutional grounds.

transitional justice

Abstract:
Cost-benefit analysis is a widely used governmental evaluation tool, though academics remain skeptical. This volume gathers prominent contributors from law, economics and philosophy for discussion of cost-benefit analysis, specifically its moral foundations, applications,and limitations. Contributors include Matthew Adler, Gary Becker, John Broome, Robert Frank, Robert Hahn, Lewis Kornhauser, Martha Nussbaum, Eric Posner, Richard Posner, Henry Richardson, Amartya Sen, Cass Sunstein and Kip Viscusi.

Abstract:
From stigmatizing publicity to coerced gestures of public contrition to ritualized debasement ceremonies, shaming penalties are on the rise in American law. This paper considers the feasibiltity and value of such penalties for federal white collar offenders. It develops a theoretical model that connects the deterrent efficacy of such penalties to their power to signal the undesirable propensities of wrongdoers and the desirable propensities of citizens who shun wrongdoers. It also considers how the efficiency of such penalties is affected by their power to express publicly valued social meanings. Finally, it examines practical issues relating to the incorporation of shaming penalties into the Federal Sentencing Guidelines.

Abstract:
This article examines the legislative history of the Bankruptcy Reform Act of 1978, the source of modern bankruptcy law. The conventional academic view of the 1978 Act is that it serves the public interest in an orderly mechanism for resolving disputes between creditors and defaulting debtors. Against this view, this article argues that the 1978 Act reflects the interests of organized lobbyists, such as banks and other large creditors, lawyers, bankruptcy judges, and Article III judges, and the institutional interests of members of Congress, and that the 1978 Act does not reflect the influence of unorganized individuals, such as debtors. The article makes three main arguments. (1) The administrative structure introduced by the 1978 Act -- characterized by a strict division of labor between judges and trustees, elevation of the status of bankruptcy judges, and the creation of a federal agency to control trustees -- resulted from an effort by Congress to seize patronage opportunities from local governments and from the judicial branch of the federal government and to increase the value of these opportunities. (2) The exemption rules in the 1978 Act resulted from an effort by Congress to seize control over exemption policy from the states -- an effort, however, that the states resisted with partial success. (3) The law of reorganization resulted from the successful lobbying of large creditors and bankruptcy lawyers to increase their control over reorganization proceedings enough to enable them to freeze out small creditors and non-management equityholders. It is further argued that interest group pressures of the sort described above account for many of the provisions of the Bankruptcy Code that are the source of current dissatisfaction.