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Abstract:
How do judges judge? Do they apply law to facts in a mechanical and deliberative way, as the formalists suggest they do, or do they rely on hunches and gut feelings, as the realists maintain? Debate has raged for decades, but researchers have offered little hard evidence in support of either model. Relying on empirical studies of judicial reasoning and decision making, we propose an entirely new model of judging that provides a more accurate explanation of judicial behavior. Our model accounts for the tendency of the human brain to make automatic, snap judgments, which are surprisingly accurate, but which can also lead to erroneous decisions. Equipped with a better understanding of judging, we then propose several reforms that should lead to more just and accurate outcomes.

behavioral law and economics, judges, heuristics and biases, dispute resolution, psychology, realism, formalism

Abstract:
The Internet is turning the process of contracting on its head. With increasing alacrity, people are mouse-clicking their way into enforceable standard-form contracts on the Internet ("browsewrap" contracts) while installing software ("clickwrap" contracts). The emergence of this new contracting medium has produced numerous claims of the inadequacy of existing contract law to govern standard-form contracts made at the speed of light. Consumer advocates worry that the electronic media presents new methods for businesses to take advantage of consumers. By contrast, businesses engaged in e-commerce insist that courts must relax existing legal protections so as to nourish this new form of business. We contend that existing contract law provides an appropriate regime in which to assess electronic contracts.

We support our conclusion by reviewing the underlying factors that shape the law of standard-form contracting in the paper world and by determining whether the new dynamics of e-commerce create a fundamentally different environment. In the paper world, business use of standard forms creates efficiencies and saves costs for both businesses and consumers, but it also can lead to business' exploitation of consumers. We assess the rational, social, and cognitive factors, as well as other business practices, that affect consumers' abilities to protect themselves from exploitation. We conclude that the current judicial approach appropriately presumes consumer assent to negotiated terms and, so long as the consumer has had a reasonable opportunity to read the standard terms, to conscionable standard terms. Courts also properly remain vigilant in policing unreasonable boilerplate.

A switch to electronic commerce does not change this analysis. To be sure, the electronic environment has provided consumers with new research tools, thereby suggesting that rational consumers will be better able to protect themselves, and the electronic environment has eliminated the social pressures that businesses can use to induce consumers to enter into exploitationist contractual terms. However, the new electronic environment has not changed the overly optimistic manner in which consumers think about these contracts, namely that nothing will go wrong and that boilerplate terms do not matter. In addition, the electronic environment has created new opportunities to exploit consumers. We therefore assert that courts should adopt a strategy similar to their approach in the paper world. Courts should presume the enforceability of both browsewrap and shrinkwrap contracts, but should also focus on the potential for procedural and substantive exploitation by businesses.

Contracts, Cyberspace

Abstract:
The 2008 presidential campaign and election will be historic. It marks the first time a Black person (Barack Obama) and a woman (Hillary Clinton) have a real chance at winning the Presidency. Their viability as candidates symbolizes significant progress in overcoming racial and gender stereotypes in America. But closer analysis of the campaigns reveals that race and gender have placed enormous constraints on how these two Senators can run their candidacy. This is not surprising in light of the history of race and gender in voting and politics in America. But what is perhaps more surprising is how the campaigns have had to struggle not only with overt sexism and racism, but with unconscious, or implicit, biases in their campaigns. Recent research from social psychologists indicates that unconscious race and gender biases are widespread and influence judgment. Because existing anti-discrimination law is designed to combat overt, or explicit, biases, it does not address unconscious biases well. If even Senators Clinton and Obama, with an array of consultants and advisors behind them, find unconscious racism and sexism to be a stumbling block in what is nothing more than the most elaborate, grandest job interview of them all, then what must it be to the average Black person or woman seeking a job or promotion?

Abstract:
The quality of the judicial system depends upon the quality of decisions that judges make. Even the most talented and dedicated judges surely make occasional mistakes, but the public understandably expects judges to avoid systematic errors. This expectation, however, might be unrealistic. Psychologists who study human judgment and choice have learned that people frequently fall prey to cognitive illusions that produce systematic errors in judgment. Even though judges are experienced, well-trained, and highly motivated decision makers, they might be vulnerable to cognitive illusions. We report the results of an empirical study designed to determine whether five common cognitive illusions (anchoring, framing, hindsight bias, inverse fallacy, and egocentric biases) would influence the decision-making processes of a sample of 167 federal magistrate judges. Although the judges in our study appeared somewhat less susceptible to two of these illusions (framing effects and the inverse fallacy) than lay decision makers, we found that each of the five illusions we tested had a significant impact on judicial decision making. Judges, it seems, are human. Like the rest of us, their judgment is affected by cognitive illusions that can produce systematic errors in judgment.

Abstract:
In securities-fraud cases, courts routinely admonish plaintiffs that they are not permitted to rely on allegations of "fraud by hindsight." In effect, courts disfavor plaintiffs' use of evidence of bad outcomes to support claims of securities fraud. Disfavoring hindsight evidence appears to tap into a well known, well-understood, and intuitively accessible problem of human judgment of "20/20 hindsight." Events come to seem predictable after unfolding, and hence, bad outcomes must have been predicted by people in a position to make forecasts. Psychologists call this phenomenon the hindsight bias. The popularity of this doctrine among judges deciding securities cases suggests that judges actively seek techniques that enable them to correct for psychological biases that might otherwise affect their decision-making.

This paper assesses the hypothesis that judges have adopted the "fraud-by-hindsight" doctrine so as to avoid erroneous judgment infected with the hindsight bias. We find that although judges have identified a real problem in human judgment, they are not developing a doctrine to remedy the influence of hindsight on judgment. Rather, they are using this problem of human judgment as the justification for expanding their authority to manage the complex, high-stakes securities cases that come before them. The result provides judges with the greater case-management authority they seek, but leaves the securities litigation without a meaningful doctrine to ameliorate the influence of hindsight on judgment.

Abstract:
Products liability law has witnessed a long debate over whether manufacturers should be held strictly liable for the injuries that products cause. Recently, some have argued that psychological research on human judgment supports adopting a regime of strict enterprise liability for injuries caused by product design. These new proponents of enterprise liability argue that the current system, in which manufacturer liability for product design turns on the manufacturer's negligence, allows manufacturers to induce consumers into undertaking inefficiently dangerous levels or types of consumption. In this paper we argue that the new proponents of enterprise liability have: (1) not provided any more than anecdotal evidence for their thesis; (2) failed to account for the mechanisms the law already has available to counter manufacturer manipulation of consumers; and (3) made no effort to address the well-known problems enterprise liability creates. Furthermore, even on its own terms, the new arguments for enterprise liability fail to consider the tendency of some manufacturers to exacerbate the risks that some products pose ? a tendency that enterprise liability would exacerbate. In short, the insights gleaned from psychological research on human judgment do not support adopting a system of strict enterprise liability for products.

torts, products liability

Abstract:
How should a market filled with investors who chronically make bad investments, but is nevertheless efficient, be regulated? A growing body of evidence suggests that this is the state of most securities markets; investors rely on cognitive processes that produce systematically bad choices, and yet the market remains largely efficient. In fact, cognitive errors might be essential to their efficient operation. Even investors who make systematic errors also often possess real and unique information that can contribute to accurate pricing of securities. If such investors became mindful of their limited ability to distinguish between real information and erroneous information, they would decline to rely on their beliefs to invest and would thereby withhold private information from the market. Over-confidence on the part of these investors leads them to trade anyway. This over-confidence provides market liquidity, but more importantly, provides the market with the private information that individual investors possess (but should, rationally, withhold). Hence, reforms designed to save investors from the costs of their cognitive errors would reduce market liquidity and deprive the market of valuable information. In short, markets need irrationality.

Abstract:
Democratic legal systems make law in one of two ways: by abstracting general principles from the decisions made in individual cases (from the bottom up); or by declaring general principles through a centralized authority that are to be applied in individual cases (from the top down). These two processes are, respectively, adjudication and legislation. Each process presents the underlying legal issue from a different cognitive perspective, highlighting and hiding different aspects of a legal problem. The single-case perspective of adjudication can seem cognitively inferior to the broad perspectives that legislatures can incorporate into their decision-making processes, but adjudication also has its advantages. The adjudicative approach, however, has advantages that are less obvious. Notably, the adjudicative process is more likely to facilitate that adoption of simple, elegant rules for decision making. The assessment of which approach is superior is therefore indeterminate. Each has its strengths and weaknesses that make it more or less appropriate for different contexts.

Abstract:
Due process requires courts to make decisions based on the evidence before them without regard to information outside of the record. Skepticism about the ability of jurors to ignore inadmissible information is widespread. Empirical research confirms that this skepticism is well founded. Many courts and commentators, however, assume that judges can accomplish what jurors cannot. This Article reports the results of experiments we have conducted to determine whether judges can ignore inadmissible information. We found that the judges who participated in our experiments struggled to perform this challenging mental task. The judges had difficulty disregarding demands disclosed during a settlement conference, conversation protected by the attorney-client privilege, prior sexual history of an alleged rape victim, prior criminal convictions of a plaintiff, and information the government had promised not to rely upon at sentencing. This information influenced judges' decisions even when they were reminded, or themselves had ruled, that the information was inadmissible. In contrast, the judges were able to ignore inadmissible information obtained in violation of a criminal defendant's right to counsel and the outcome of a search when determining whether probable cause existed. We conclude that judges are generally unable to avoid being influenced by relevant but inadmissible information of which they are aware. Nevertheless, judges displayed a surprising ability to do so in some situations.

Abstract:
Administrative law judges attract little scholarly attention, yet they decide a large fraction of all civil disputes. In this Article, we demonstrate that these executive branch judges, like their counterparts in the judicial branch, tend to make predominantly intuitive rather than predominantly deliberative decisions. This finding sheds new light on executive branch justice by suggesting that judicial intuition, not judicial independence, is the most significant challenge facing these important judicial officers.

Judges, ALI, Decision-making, Intuition, Deliberation, Heuristic and biases

Abstract:
Race matters in the criminal justice system. Black defendants appear to fare worse than similarly situated white defendants. Why? Implicit bias is one possibility. Researchers, using a well-known measure called the implicit association test, have found that most white Americans harbor implicit bias toward Black Americans. Do judges, who are professionally committed to egalitarian norms, hold these same implicit biases? And if so, do these biases account for racially disparate outcomes in the criminal justice system? We explored these two research questions in a multi-part study involving a large sample of trial judges drawn from around the country. Our results - which are both discouraging and encouraging - raise profound issues for courts and society. We find that judges harbor the same kinds of implicit biases as others; that these biases can influence their judgment; but that given sufficient motivation, judges can compensate for the influence of these biases.

Judges, race

Abstract:
Experimental evidence generated in controlled laboratory studies suggests that the legal system in general, and punitive damages awards in particular, should display an incoherent pattern. According to the prediction, inexperienced decision makers, such as juries, should fail to convert their qualitative judgments of defendants' conduct into consistent, meaningful dollar amounts. This Article tests this prediction and finds modest support for the thesis that experience across different types of cases will lead to greater consistency in awards. Despite this support, numerous studies of damage awards in real cases detect a generally sensible pattern of damage awards. The article tries to reconcile the largely coherent pattern of real-world results with the experimental findings and suggests that careful attention to sources of coherence and incoherence can help reconcile experimental and real-world results.

Abstract:
Insurers play a critical role in the civil justice system. By providing liability insurance to parties who would otherwise be untenable as defendants, insurers make litigation possible. Once litigation materializes, insurers provide representation, pay legal fees, and often play a central role in resolving disputes through settlement or adjudication. In this paper, we explore empirically how these key litigation players make important decisions in the litigation process, like evaluating a case, deciding whether to settle, and if so, on what terms. We find that insurers, though not entirely immune to the effects of cognitive illusions that have been shown to distort litigation decision making, appear to make decisions in a more economically rational fashion than other litigation players. This finding, though preliminary, casts new light on litigation theory and practice.

litigation, settlement, heuristics and biases, experts, insurance, anchoring, framing, self-serving bias

Abstract:
Legal systems make law in one of two ways: by abstracting general principles from the decisions made in individual cases (the adjudicative process) or by declaring general principles through a centralized authority that are to be applied in individual cases (through the rulemaking process). Administrative agencies have long had the unfettered authority to choose between the two methods. Although each method could identify the same solution to the legal issues that come before them, in practice, the two systems commonly settle upon different resolutions. Each system presents the underlying legal issue from a different cognitive perspective, highlighting and hiding different aspects of a legal problem. These differences produce different resolutions to legal problems. The single-case perspective of adjudication seems, in many ways, cognitively inferior to the broad perspectives that legislatures can incorporate into their decision-making processes. The adjudicative approach, however, has advantages that are less obvious. Notably, the adjudicative process is more likely to facilitate the adoption of simple, elegant rules for decision-making. The assessment of which approach is superior is, therefore, indeterminate. Each has its strengths and weaknesses that make them more or less appropriate for different contexts.

Abstract:
In the Anglo-American legal tradition, people are responsible for damage caused by their failure to conform their conduct with that of the "reasonable person." With few exceptions, so long as one's conduct conforms to that of the reasonable person, then even if the conduct harms others, it does not create liability. Courts understand that the "reasonable person" is an idealized legal fiction but believe the construct to be a useful way to identify culpable conduct. For the reasonable-person test to be useful, courts must identify the characteristics of this reasonable person. As to cognitive and perceptual abilities, courts endow this hypothetical reasonable person with what they believe are "ordinary" skills and abilities. Recent cognitive psychological research, however, indicates that intuitions about ordinary skills and abilities vastly overstate the cognitive skills people actually possess. Consequently, reliance on intuition and folk wisdom about ordinary abilities leads courts to overattribute accidents to negligent carelessness, rather than unavoidable misfortune.

Abstract:
The election of Barack Obama as the Forty-fourth President of the United States signals that the traditional modes of thinking about race in America are outmoded. Commentators and pundits have begun to suggest that the election of a Black man to the nation's highest office means that the United States has entered a post-racial era in which civil rights laws are becoming unnecessary. Although President Obama's election means that explicit, open anti-Black racism has largely faded, an analysis of the campaign's rhetoric and themes suggests that unconscious racism is alive and well. Rather than suggest a retreat from traditional civil rights protections, the 2008 election calls for maintaining and enhancing efforts to ensure that civil rights laws to address less virulent, less explicit forms of racism that persist.

Barack Obama, Election 2008, implicit bias, race

Abstract:
Legal scholars have expressed a growing interest in the power of social norms. Legal scholars now frequently argue that people obey the law even in the absence of legal sanctions and order their lives effectively without the assistance of courts, legislatures, and administrative agencies. This work promises to provide social reformers with inexpensive and effective ways of controlling anti-social behavior. Social psychologists, however, have conducted decades of research on social norms indicating that it is difficult to manipulate behavior by manipulating social norms in a reliable manner. Although social norms are important determinants of behavior, their influence can also be quite ephemeral. This Article presents social psychological research demonstrating that social norms are both more powerful and less powerful than legal scholars have heretofore recognized.

Abstract:
In recent years, a growing number of legal scholars have begun developing novel applications of psychological research to legal issues. In particular, these scholars have found applications of the psychology of judgment and choice to issues that have heretofore been dominated by law and economics. This new work has generated criticism, both from law-and-economics scholars and from more conventional legal scholars. Critics charge that the new work in law and psychology is insensitive to context, indeterminate, relies upon an endless, seemingly ad hoc, laundry list of cognitive phenomena, and provides no normative implications that law needs. In turn, these problems make it difficult to apply the psychology of judgment and choice to practical, meat-and-potatoes legal problems, such as whether to enforce a liquidated damages clause in a contract. These charges are unfounded. The psychology of judgment and choice includes coherent theories developed from robust, empirically supported phenomena. In turn, these lead to normative implications in many, although admittedly not all legal contexts. Using the problem of liquidated damages clauses as an example, this Article shows that the psychology of judgment and choice is far clearer and deterministic than has been suggested by critics. Furthermore, the new law and psychology leads legal scholars to look at how people respond to the law in novel and important ways that can only improve legal scholarship.

Abstract:
Society can regulate consumer products either through ex post liability or ex ante regulation. In theory, either system can induce manufacturers to undertake precautions that are cost-effective, and only those precautions that are cost-effective. It is therefore difficult to determine why manufacturers, or society, would prefer one system over another. In practice, however, cognitive limitations of judges and juries can create incentives to take an excess of precautions in the liability system. People tend to see past events as more predictable than they really were, a phenomenon known as the hindsight bias. The hindsight bias leads courts to find defendants who took reasonable care negligent or even reckless. Consequently, the liability system can be more expensive than a regulatory system, both to potential defendants and to society. Cognitive biases in the liability system can therefore explain why the tobacco industry expressed interest in settlements that would mimic a regulatory system. The influence of the hindsight bias also suggests that ex ante regulation is more efficient and more fair than judging ex post liability in hindsight.

Abstract:
The Federal Endangered Species Act ("ESA") forbids private landowners from altering land in ways that harm endangered animals on their land. Both conservationists and property-rights advocates have argued that this prohibition has the perverse effect of harming species because it creates incentives for landowners to keep endangered species off of their property. This paper tests that assertion empirically, using data on population trends and species location published by the U.S. Fish and Wildlife Service. Because the Federal ESA does not protect plants from private landowners, but some state endangered species laws do, the status of endangered plant populations in different states was used to assess the impact that restrictions on private landowners have on population trend sin endangered plants. Overall, endangered plant populations fare worse on private land than on federal land (where they are protected). Furthermore, plants found predominantly on private land fare much better in states that forbid private landowners from harming plants than in states that do not forbid private landowners from harming plants. The data do not support the theory that restrictions on private landowners harm endangered species.

Abstract:
Past events frequently seem inevitable and predictable after they unfold -- a tendency that cognitive psychologists have labeled the "hindsight bias." This bias affects judgments of liability in the legal system. For example, by making adverse outcomes seem more predictable (and hence avoidable) than they really were, defendants can be held liable for adverse outcomes that hey could not have foreseen. In effect, judgments of liability made under a negligence standard resemble those made under a standard of strict liability. Courts, however, have historically shown an awareness of the hindsight bias. When possible, courtshave developed methods of making judgments that avoid reliance on the hindsight bias. These adaptations include barring after-acquired information from the decision-making process and carefully enforcing any ex ante understanding about liability that parties may have had. When no such mechanisms are available, the courts choose sensibly among second-best solutions. The legal system is thus shown to incorporate and adapt to this limitation on human judgment.

Abstract:
Every lawsuit is a gamble. This is well understood in the literature on the economics of litigation, which assumes that litigants make choices that are risk-averse or risk-neutral, depending upon size of the stakes in the litigation relative to their wealth. Research on the psychology of judgment and choice, however, has revealed that risk preferences depend upon a decision-maker's reference point rather than their wealth. When choosing among perceived gains, people make risk-averse choices, and when choosing among losses, people make risk-seeking choices. In general, this suggests that defendants will often adopt risk-seeking litigation strategies, while plaintiffs will often adopt risk-averse strategies. This theory has several implications: that settlement offers are consistently well below the expected value of a case; that reforms that increase the risks of litigation, such as fee-shifting, have asymmetric effects on plaintiffs and defendants; and that attorneys can promote or impede settlement by manipulating the perceptions of their clients as to whether they face gains or losses. Data from survey responses to hypothetical scenarios and from actual settlement decisions support this theory.