Temporal Inconsistency and the Regulation of Corporate Misconduct

Virginia Journal of Criminal Law (2013), Forthcoming

Brooklyn Law School, Legal Studies Paper No. 344

40 Pages Posted: 15 Jun 2013  

Miriam H. Baer

Brooklyn Law School

Date Written: June 13, 2013

Abstract

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

Baer, Miriam H., Temporal Inconsistency and the Regulation of Corporate Misconduct (June 13, 2013). Virginia Journal of Criminal Law (2013), Forthcoming; Brooklyn Law School, Legal Studies Paper No. 344. Available at SSRN: https://ssrn.com/abstract=2279081

Miriam H. Baer (Contact Author)

Brooklyn Law School ( email )

250 Joralemon Street
Brooklyn, NY 11201
United States

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