Abstract

http://ssrn.com/abstract=1412878
 
 

Citations (4)



 
 

Footnotes (329)



 


 



Investment Indiscipline: A Behavioral Approach to Mutual Fund Jurisprudence


William A. Birdthistle


Illinois Institute of Technology - Chicago-Kent College of Law

June 1, 2009

University of Illinois Law Review, Vol. 2010, No. 1, p. 61

Abstract:     
Next Term, in Jones v. Harris, the Supreme Court will be called upon to resolve philosophical divergences on a massive, critical, yet academically slighted subject: the dysfunctional system through which almost one hundred million Americans attempt to save more than ten trillion dollars for their retirement. When this case was in the Seventh Circuit, two of the foremost theorists of law and economics, Chief Judge Frank Easterbrook and Judge Richard Posner, disagreed vociferously on competing analyses of the investment industry. The Supreme Court’s ruling will not only resolve the intricate fiduciary and doctrinal issues of this dispute but also have profound implications upon several major theoretical debates in contemporary American jurisprudence: the clash of classical versus behavioral economics; the judicial capacity to evaluate increasingly sophisticated econometric analyses of financial systems; and the determination of the legal constraints - if any - upon executive compensation decisions.

In this Article, I advance a positive account of the economic and legal context of this dispute and then argue normatively for a behavioral approach to its resolution. Because of the unique structure and history of the personal investment industry in the United States, the architecture of this segment of the economy is singularly bereft of beneficial market forces and thus vulnerable to significant fiduciary distortions. The ultimate judicial resolution of this dispute should take full account of the behavioral constraints upon individual investors and their advisors to avoid nullifying a federal statute and to impose discipline in a vital segment of the U.S. economy.

Number of Pages in PDF File: 48

Keywords: mutual fund, gartenberg, section 36(b), fiduciary duty, Jones, Harris, Jones v. Harris, behavioral economics, governance, investment, savings, retirement, excessive, fees

Accepted Paper Series


Download This Paper

Date posted: June 1, 2009 ; Last revised: August 14, 2012

Suggested Citation

Birdthistle, William A., Investment Indiscipline: A Behavioral Approach to Mutual Fund Jurisprudence (June 1, 2009). University of Illinois Law Review, Vol. 2010, No. 1, p. 61. Available at SSRN: http://ssrn.com/abstract=1412878

Contact Information

William A. Birdthistle (Contact Author)
Illinois Institute of Technology - Chicago-Kent College of Law ( email )
565 W. Adams St.
Chicago, IL 60661-3691
United States

Feedback to SSRN


Paper statistics
Abstract Views: 2,221
Downloads: 376
Download Rank: 43,474
Citations:  4
Footnotes:  329

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo5 in 0.265 seconds