Temporal Inconsistency and the Regulation of Corporate Misconduct
Virginia Journal of Criminal Law (2013), Forthcoming
40 Pages Posted: 15 Jun 2013
Date Written: June 13, 2013
This is a comment written for the Virginia Journal of Criminal Law responding to Professor Manuel Utset’s work on temporal inconsistency and its application to corporate misconduct.
Over the years, Professor Utset has done us a great service by highlighting and explaining the hyperbolic discounting literature, and using it to better understand corporate failures and the laws and regulations that lawmakers have enacted in response to those failures.
In this Comment, I suggest three related choices that lawmakers and regulators must confront as they attempt to incorporate temporal inconsistency into their regulatory agenda. The first choice is between sanctions and enforcement measures. The second choice is between ex post sanction-based enforcement and a more structural, ex ante type of intervention. And the third choice is between public regulation and private ordering. None of these choices are particularly easy, and all three are somewhat interconnected. They thus demonstrate just how tricky it is for lawmakers and policymakers to tackle the problem of temporal inconsistency within corporate settings.
Keywords: Corporate governance, deterrence, temporal inconsistency, regulation, hyperbolic discounting, behavioral economics
Suggested Citation: Suggested Citation