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Abstract: As law and economics turns 40 years old, its continued vitality is threatened by its unrealistic core behavioral assumption: that people subject to the law act rationally. Professors Korobkin and Ulen argue that law and economics can reinvigorate itself by replacing the rationality assumption with a more nuanced understanding of human behavior that draws on cognitive psychology, sociology and other behavioral sciences, thus creating a new scholarly paradigm called "law and behavioral science". This article provides an early blueprint for research in this paradigm. The authors first explain the various ways the rationality assumption is used in legal scholarship, and why it leads to unsatisfying policy prescriptions. They then systematically examine the empirical evidence inconsistent with the rationality assumption and, drawing on a wide-range of substantive areas of law, explain how normative policy conclusions of law and economics will change and improve under the law-and-behavioral-science approach.
Abstract: Will there ever be a Nobel Prize in law? I use this question as a framework for discussing the current state of legal scholarship and the trend toward making legal scholarship more "scientific." I discuss the meaning of "science" and the scientific method and summarize the various theories that have developed over time to verify, modify, or reject scientific paradigms. Next, I consider whether the study of law is a science. All sciences share core theoretical beliefs about the same class of phenomena and agreed-upon methods of establishing the validity of claims made about those phenomena. This allows for the transnational study and dissemination of information about that scientific field, regardless of the country of origin of that information. Most legal academics believe that this description of a science does not and, more importantly, could not apply to their field. Rather, they argue that their field of study is inherently local by both geography and subject matter. Therefore, a legal academic who studies the tort liability regime in Moldova is generally thought to be studying something very different from someone who studies contract law in Moldova or the tort liability regime in Laos. I make three claims. First, I argue that there is no inherent reason why law cannot be scientific. There is no inherent reason within law why there cannot be a transnational theoretical core about, say, tort liability of which each particular jurisdiction's instantiation is but an example. I draw the analogy to economics in which there is a single microeconomic theory of individual and group decisionmaking that instantiates into different national and regional economies, as dictated by different histories, social and governmental organization, resource endowments, and personal and group preferences. Second, I argue that law seems to be in the process of developing a transnational theory of organizations, consensual agreements, liability regimes, and more and that law and economics is currently (but not necessarily) the source of that theoretical core. I give examples of four empirical studies of legal issues that illustrate these trends. The astonishing aspect of the first three of these studies is that although they make empirical claims that question widely held beliefs about what the law in action really is, there has been no apparent alteration in what we teach law students in response to these empirical claims. By contrast, the response to Professor Ellickson's remarkable empirical study of the Coase Theorem in Shasta County, California, has been a dramatic alteration in the profession's belief about the Coase Theorem and the centrality of law in affecting behavior - precisely the reaction one would expect in a science in which theory and empirical work are cognizant of and responsive to one another. Third, I believe that this trend toward a more scientific study of law has been greatly spurred by law and economics, whose impact on legal scholarship has been profound in the United States, if not elsewhere.
Abstract: A behavioral economics literature identifies how behaviorally-derived assumptions affect the economic analysis of criminal law and public law enforcement. We review and extend that literature. Specifically, we consider the effect of cognitive biases, prospect theory, hedonic adaptation, hyperbolic discounting, fairness preferences, and other deviations from standard economic assumptions on the optimal rules for deterring potential offenders and for regulating (or motivating) potential crime victims, legislators, police, prosecutors, judges, and juries.
Abstract: There have been a large number of innovations in legal scholarship in the U.S. legal academy over the past 25 or so years and very few from legal scholars in other parts of the world. For instance, because both of us work in the area of law and economics, we were both acutely aware of the large differences in the receptivity to law and economics as between the U.S. and Europe. The U.S. legal academy has generously embraced law and economics (and some other legal innovations), while Europe (and the rest of the world) has not. Why has the U.S. led the world in the production and adoption of legal scholarly innovations? This Article seeks to answer that question generally and with particular reference to law and economics. In Part II we deal with two definitional issues - what we mean by a "legal innovation" and what counts as "law and economics." The scholarly innovations on which we focus are new methods of looking at many areas of the law, such as feminist jurisprudence, or the articulation of the principles and boundaries of an entire new area of law, such as elder law. By "law and economics," we mean the application of economic analysis to any of the area to which its application would not be obvious. Then in Part III we offer a series of anecdotes and empirical studies designed to show that law and economics is much more prominent in U.S. legal scholarship than in European legal scholarship. We then seek, in Part IV, explanations for the differences between the U.S. and European legal academies in their production and adoption of legal scholarship innovations generally and with respect to law and economics particularly. Our central claim is that it is the competitiveness of higher and legal education that is the principal explanation for the scholarly innovativeness of the U.S. and the lack of competition (and the consequent lack of an incentive to innovate) in European higher and legal education that explains the differences. We further hypothesize that the production and adoption of law and economics are attractive only to those who have experienced a prior legal scholarly innovation - legal realism. We draw a clear line of intellectual heritage from legal realism to law and economics. Before settling on competition and legal realism as the principal explanations for the production and adoption of legal scholarship innovations, we canvass (and reject) a large number of alternative explanations, such as political ideology, money, the differences between common and civil law systems, the structure of legal education, and more. In Part V we draw a connection between the standard economic theory of innovation and diffusion and our observations in the prior four sections of the Article. That economic theory of innovation and diffusion identifies three factors - demand, supply, and market structure - as determining the presence and pace of innovation and diffusion. We relate each of those factors to observable differences between the U.S. and Europe, showing that our explanation of the production and adoption of legal scholarly innovations follows the same factors as does the economic theory of innovation in production techniques.
Abstract: In Republic.com Professor Cass Sunstein argues that despite its many advantages the Internet may have a deleterious effect on deliberative democracy. This effect might arise through the increasing use of filtering software to select only that information that is consistent with the user's predispositions and beliefs. The great informational advantages of the Internet will not broaden users' horizons; they may narrow them. Moreover, users will begin to form groups on the Internet only with those who share their views, and this will lead to the fractionation known as group polarization. Professor Sunstein, in a companion e-book, Echo Chambers, cites the controversies over Bush v. Gore and the impeachment of President Clinton as examples of the polarization that have plagued our public life and that the Internet fosters. Professor Sunstein considers a range of regulations of Internet use that might ameliorate its adverse effects on democracy, such as requiring websites that advocate a particular point of view to provide hyperlinks to websites that tout an alternative view. I take issue with Professor Sunstein on three grounds. First, I believe that, so far, the democracy-enhancing aspects of the new communications media are much, much greater than the democracy-threatening aspects. Interestingly, the empirical literature on who uses the Internet and what its effects on them have been suggests that far from narrowing their perspective, Internet use has fostered users' civic engagement and broadened their views. Second, I find that the particular reforms that Professor Sunstein proposes are impracticable and unlikely to work effectively even if practicable. And third, I believe that, conceding for the sake of argument that Professor Sunstein's problems with the Internet are real, the best hope for correction consists of more speech on the Internet through encouraging vigorous competition and broad access.
Abstract: In April, 2001, the University of Illinois College of Law hosted a symposium on empirical and experimental methods in legal scholarship. This introduction explains that the organizers deemed the symposium to be timely in that there has been a significant increase in the volume and importance of empirical work related to legal topics and the first tentative steps in applying experimental methods to the study of law. The authors of this introduction elaborate on these trends and then briefly describe the articles that were presented at the symposium and subsequently published in the University of Illinois Law Review. The symposium had two principal parts. The articles in the first part lay out the general case for empirical and experimental work in law, explain some of the relevant techniques, and predict future trends in empirical legal research. The articles in the second part concentrate on empirical and experimental work in particular areas of the law, such as contract law, tort law, corporation law, legal history, criminal law and procedure, and public choice. Those articles summarize the work done thus far and the issues that that work has resolved and then lays out the questions that further empirical and experimental work must seek to answer. The symposium is dedicated to the memory of Professor Gary Schwartz, who participated and whose contribution on empirical work in tort law graces the proceedings.
Abstract: This article responds to an argument made by Professors Swygert and Yanes that legal rules be constructed so as to take account of efficiency and equity simultaneously. First, we present an approach that lawmakers can use when allocating property rights if they wish to pursue an efficient allocation of such entitlements and simultaneously insure that the social benefits of assigning the entitlement efficiently are divided between the competing claimants. We call this theory the "market contrarian" approach to entitlement allocation, and distinguish it from the market mimicking and market facilitating approaches to entitlement allocation favored in most law and economics analyses. We then argue that the joint goals of efficiency and equity might be served by protecting entitlements, once allocated, with what we term "super liability" rules. Such rules have the effect of permitting a disappointed entitlement claimant to take an entitlement from a less efficient owner while insuring that the cooperative surplus created by such an exchange is shared by the parties. Second, we argue that strategies for constructing legal rules that simultaneously consider both equity and efficiency will usually be inferior to a strategy of creating efficient legal rules and then later using the tax and transfer system to create equity. There are two primary reasons for this: (1) doing equity in the context of a single legal rule will often have the effect of promoting broader inequities; and (2) constructing legal rules to promote equity creates substantial disincentives to the production of social resources.
Abstract: In April, 2001, the University of Illinois College of Law hosted a symposium on empirical and experimental methods in legal scholarship. This is the Table of Contents for the symposium.
Abstract: In "Voting with Dollars", Bruce Ackerman and Ian Ayres of the Yale Law School propose a new method of financing federal election campaigns. First, Ackerman and Ayres criticize what they call the "old paradigm" of campaign finance reform - one that relies on limiting the amount of money that individuals and organizations can donate and directs a modest amount of public money toward candidates for federal office. Their view is that these methods of command-and-control regulation are bound to fail in their goal of limiting the baneful influence of private money on federal campaigns and, thereby, on public policy. Then, Ackerman and Ayres argue in favor of two related reforms: a Patriot-dollar account that every registered voter may allocate to candidates and a secret donation booth for private contributions to candidates for public office. This review finds much to admire in the Ackerman-Ayres reform proposal. But it criticizes some minor administrative details of the reforms and raises two broader concerns: that the injection of up to $5 billion in public money into each campaign cycle might lead not to more deliberative democracy but to even more mind-numbing, trivial campaigns and that the amount of private money in federal campaigns may not be, after all, so large as to excite concern.
Abstract: The problem of odious debt typically arises when a despotic regime has incurred substantial sovereign debt and is then succeeded by a less-despotic, possibly democratic, regime that seeks to repudiate that debt. There is no agreed-upon method for dealing with attempts to repudiate odious debt. We examine the shortcomings of three proposed methods of dealing with odious debt—doing nothing and letting the international community deal with instances on a case-by-case basis, establishing an international committee to identify sovereign debt ex ante as odious, and establishing an international tribunal to adjudicate ex post claims for repudiation. We find both principled and practical difficulties with each of these methods. We also identify the associated but little-remarked problem of the odious creditor, one who will lend to the most heinous regime, typically for reasons of national expediency. We propose that the decision to allow repudiation should take into account the realities of international relations and the broad goals of the international community and the international financial institutions to foster economic development and democratization. We suggest that the IFIs establish a well-crafted fund and insurance scheme to which creditors and nations seeking to repudiate odious debt can appeal for assistance. We recognize that there are moral hazard and adverse selection problems, as with any insurance scheme. Nonetheless, we believe that this scheme offers more flexibility and is far more practicable and acceptable to the international community than any other corrective heretofore proposed.
Abstract: There is a widespread belief throughout Latin America that the judicial sector is not in a position to foster private sector development within a market system. The courts are overburdened and unable to dispose of cases in a timely fashion. As a result, frustrated litigants lose faith in the public justice system's ability to resolve their disputes. This loss of faith, in turn, causes private parties to factor added costs for judicial delay into their private transactions, and these added costs reduce economic activity and retard economic development. Because there are no viable alternative dispute resolution mechanisms in Latin American countries, the region urgently needs an efficient judicial sector to complement the market reforms recently introduced by many governments. An important implication of this observation is that the enhancement of the capability of the courts to satisfy the demand for dispositions is one of the most important, but least noted, aspects of Latin American economic development strategies. First, we report the results of surveys of court-users in several Latin American countries in an effort to identify the causes of dissatisfaction with the courts. Second, we show that simply increasing the amount of financial resources available to the judiciary will not necessarily increase the courts' efficiency. Finally, we look at a large sample of commercial cases in Argentina and Venezuela to identify court-related and litigant-related factors associated to the length of cost-adjusted time to final disposition of court cases. On the basis of this empirical work we identify the most fruitful courses of judicial reform in Latin America.
judicial,courts, court reform, judicial effectiveness, judicial efficiency, case management, jurimetric, jurimetrics
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