224 research outputs found

    Bifurcating Settlements

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    In settling a lawsuit, parties agree on their obligations to one another, but they need not separately address each issue, claim, or remedy that a trial court would have confronted. The legal system, however, can bifurcate the settle-ment process, requiring separate resolution of components of a settlement. Bi-furcation can protect third parties, for example, by preventing divorcing parents from trading child custody for money. In addition to identifying a wide range of contexts in which preventing trade-offs may be desirable, this Article shows that bifurcation will generally have only modest (and sometimes beneficial) effects on settlement rates

    The Uneasy Case for Patent Races Over Auctions

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    In advancing his prospect theory of patents, Edmund Kitch dismissed the possibility of distributing rights to particular inventions through auctions, arguing that the patent system avoids the need for governmental officials to define the boundaries of inventions that have not yet been created. Auctions for patent rights to entire inventive fields, however, might accentuate the benefits of a prospect approach, by allowing for earlier and broader patents. Auction designs that award the patent to the bidder that commits the most money to research and development or that agrees to charge the lowest price, meanwhile, can reduce the costs of the prospect approach. Concerns about the government\u27s ability to decide correctly when to hold auctions, however, provide an uneasy case for patent races over patent auctions. More modest uses of auctions might improve welfare, though. For example, an auction to a small number of parties of the right to race in a technological field might reduce wasteful duplication and thus accelerate innovation. Similarly, patentees might be allowed to demand auctions for extended patent scope, with the caveat that a patentee would need to outbid others by a substantial amount to win such an auction

    Cryptoinsurance

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    The sharing economy has begun to make inroads in finance. Peer-to-peer lending is growing substantially in volume and in academic attention, though it remains less than a rounding error in comparison to more traditional sources of loans. Meanwhile, Congress passed the Jumpstart Our Business Startups ( JOBS ) Act, which directed the Securities and Exchange Commission ( SEC ) to create regulations allowing crowdfunding in at least some circumstances. The SEC, as of yet, has published only proposed rules, ignoring a congressional deadline, but state regulators have begun to create their own rules for intrastate crowdfunding. Yet, one area of finance has resisted even these tentative first steps: insurance

    En Banc Revisited

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    Legal commentators have proposed a variety of solutions to the perceived problems of the U.S. courts of appeals, from splitting large circuits to assuring partisan balance in panel decisions. They have always assumed, however, that judges a particular appellate court should have sole responsibility for creating the law of that circuit, except when caseload pressures make it necessary to borrow visiting judges. In this Essay, Professor Abramowicz proposes using visiting judges in a more important role: en banc decision-making. Under this proposal, en banc decisions for one circuit would be made entirely by courts of appeals judges randomly selected from other circuits. In addition to increasing the likelihood that any given decision is more likely to be that which a majority of all courts of appeals judges would make, visiting en banc panels would allow for optimization of the number of judges participating in en banc and for generalist review of specialized courts. After assessing these benefits and some possible costs of the proposal, Professor Abramowicz advances a more general case for majoritarian judicial decisionmaking

    Modeling Settlement Bargaining with Algorithmic Game Theory

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    Past computational models of settlement bargaining have lacked explicit game theoretic foundations. Algorithmic game theory, however, offers techniques that can find perfect Bayesian equilibria even where closed-form mathematical solutions may be intractable. Some recent mathematical models tackle two-sided asymmetric information, including evidentiary signals models, in which the judgment is a sum of both shared and independent private information, and correlated signals models, in which both parties receive noisy signals about the same information. To relax assumptions inherent in these models, this paper employs several progressively more complicated techniques, including iterative elimination of dominated alternatives, no regret learning, and counterfactual regret minimization. Although these algorithms are not guaranteed to produce Nash equilibria in general-sum games like litigation, they nonetheless succeed in producing either exact or close approximate equilibria on discrete versions of the corresponding mathematical models. A single algorithmic game theory model can incorporate a number of features that state-of-the-art mathematical models cannot handle simultaneously, such as two-sided correlated signals of both liability and damages, risk aversion, and options to concede

    Speeding Up the Crawl to the Top

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    The literature on competition in corporate law has debated whether competition is a race to the bottom or a race to the top.” This Article endorses the increasing scholarly consensus that competition improves corporate law but argues that the pace of innovation in corporate law is likely to be slow. Because benefits of corporate law innovation are not internalized, neither states nor firms will have sufficient incentives to innovate. That competitive federalism is “to the top suggests that the model could be applied beyond the corporate charter context, for example to areas such as bankruptcy, but that benefits from such competition would accrue only gradually. This Article concludes by considering several means of stimulating competition in corporate law, including allowing firms to select different states for different aspects of corporate law and permitting private provision of law. Perhaps the most promising of these possibilities is the use of intellectual property law to protect corporate law innovations. Although recent decisions allowing patents for business methods make this approach feasible, the fit with existing patent law is imperfect. The scarcity in corporate law that leads to innovation is not a lack of ideas, but a lack of firms and states willing to accept the risks of being the first to innovate

    Predictive Decisionmaking

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    In this Article, Professor Abramowicz identifies a regulatory strategy that he calls predictive decisionmaking and provides a framework for assessing it. In a predictive decisionmaking regime, public or private decisionmakers make predictions, often of future legal decisions, rather than engage in normative analysis. Several scholars, particularly in recent years, have offered proposals that fit within the predictive decisionmaking paradigm, but have not noted the connection among these proposals. The Article highlights five different mechanisms on which predictive decisionmaking regimes may rely, including predictive standards, enterprise liability, accuracy incentives, partial insurance requirements, and information markets. After identifying several advantages that predictive decisionmaking strategies may have over nonpredictive alternatives, the Article identifies several potential problems with predictive decisionmaking, and develops a simple analytical framework for assessing predictive decisionmaking proposals. The Article concludes by illustrating variants on the mechanisms for accomplishing predictive decisionmaking in conjunction with new predictive decisionmaking proposals

    Toward a Jurisprudence of Cost-Benefit Analysis

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    In his book, The Cost-Benefit State, democratic theorist Cass Sunstein urges regulatory agencies to make decisions based on numerical assessments of regulatory consequences, factoring in variables ranging from effects on consumer prices to lives saved. In this Review, I seek to illustrate Sunstein\u27s conception of cost-benefit analysis and critique this conception by suggesting that cost-benefit analysis could serve a more important role than Sunstein would allow. I also argue for a more active judicial role in scrutinizing agency actions than Sunstein would recommend, though not necessarily a less deferential one. In Part I of this review, I outline Sunstein\u27s defense of the role of cost-benefit analysis and his recommendations for implementing it. Part II considers how Sunstein envisions implementation of cost-benefit analysis, including the ways in which Sunstein seeks to expand the practice and the ways in which he ultimately would limit it. In Part III, I offer a broader vision of cost-benefit analysis, recognizing the limitations of both unconstrained agency decision-making and unconstrained judicial decision-making. I argue that the development of cost-benefit principles through common law processes best avoids these opposing dangers. Finally, also in Part III, I argue that judicial review of cost-benefit analyses should take into account agency reputation and political proclivities as developed over a number of such analyses, as well as the political orientation of the courts in cases reviewing agency action

    On the Alienability of Legal Claims

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    Courts have become increasingly skeptical about rules restricting plaintiffs\u27 ability to sell legal claims, and legal commentators have argued that markets for claims would be efficient, moving claims to those who can prosecute them most efficiently. Claim sales intuitively might appear to present a clash of economic and philosophical arguments, with perceived efficiency benefits coming at the expense of societal commitments to values other than efficiency. In this Article, Professor Abramowicz argues that economic and philosophical arguments do point in opposite directions, but in the reverse directions from what one might expect. A range of philosophical and other noneconomic considerations, such as concerns about commodification, corrective justice, legal ethics, and procedural justice, pose no significant problems for claim sales. There is, however, a significant economic problem. Markets for legal claims face a particularly strong adverse selection effect, because a prospective purchaser must consider not only why the plaintiff wishes to dispose of the claim, but also why the plaintiff cannot obtain a better deal from the defendant. Thus, even a regime permitting alienation might result in very few claim sales, and many of those may be motivated by prospective inefficiencies, such as attempts to manipulate the path of legal doctrine. If, however, in some legal context plaintiffs managed to overcome this adverse selection problem, so that claim sales became the norm, the economic concern would be eliminated. But philosophical concerns would reemerge, as this Article shows by using a hypothetical mandatory alienation regime as a heuristic device

    Information Markets, Administrative Decisionmaking, and Predictive Cost-Benefit Analysis

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    FutureMAP, a project of the Defense Advanced Research Projects Agency, was to involve experiments to determine whether information markets could improve Defense Department decisionmaking. Information markets are securities markets used to derive information from the prices of securities whose liquidation values are contingent on future events. The government intended to use such a market to assess the probabilities of potential political assassinations, and the indelicacy of this potential application contributed to a controversy leading to the cancellation of the program. In this Article, Professor Abramowicz assesses whether information markets in theory could be useful to administrative agencies, and it concludes that information markets could help discipline administrative agency predictions, but only if a number of technical hurdles such as the danger of manipulation can be overcome. Because the predictions of well-functioning information markets are objective, they function as a tool that exhibits many of the same virtues in predictive tasks that cost-benefit analysis offers for normative policy evaluation. Both approaches can help to overcome cognitive errors, thwart interest group manipulation, and discipline administrative agency decisionmaking. The Article suggests that the two forms of analysis might be combined to produce a predictive cost-benefit analysis. In such an analysis, an information market would predict the outcome of a retrospective cost-benefit analysis, to be conducted some years after the decision whether to enact a particular policy. As long as the identity of the eventual decisionmaker cannot be anticipated, predictive cost-benefit analysis estimates how an average decisionmaker would be expected to evaluate the policy. Because the predictive cost-benefit analysis assessment is not dependent on the identity of current agency officials, they cannot shade the numbers to justify policies that the officials prefer for idiosyncratic or ideological reasons
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