The Error Theory of Contract

Many people have false beliefs about contract doctrine. That pervasive phenomenon has profound practical, theoretical, and normative implications that neither courts nor scholars have recognized. This Article will make three contributions to fill that gap. First, it will establish just how widespread the phenomenon is among non-lawyers. After synthesizing the existing evidence of false beliefs about contract law, it will contribute a new empirical study showing that between one-third and one-half of people falsely believe specific performance rather than damages is the remedy for breach. The Article will then argue that people’s false beliefs about contract doctrine pose a fundamental challenge to prominent promise- and consent-based theories of contract, which serve as the principal theoretical alternative to law and economics theories of contract. Because people have false beliefs about aspects of contract doctrine that affect the value of the contract, the law enforces a bargain materially different from the one to which people thought they agreed. For example, they pay a contract price they think purchases them a guarantee of performance, but the law ultimately provides them only with money damages for breach. People thus did not actually promise or consent to the bargain the law enforces. For that reason, the normative justification for existing contract doctrine cannot be grounded in promise or consent. Finally, the Article will explore the implications of that conclusion for ongoing doctrinal disputes. First, by removing promise or consent as a potential normative basis for contract doctrine, we may finally have grounds to settle long-standing disputes that ultimately depend on our choice of normative foundations about doctrines like consideration, mitigation, and unconscionability. Second, by failing to recognize the phenomenon of legal ignorance, the current debate about boilerplate misunderstood the problem it poses. If people are ignorant of, and, therefore, do not consent to, both boilerplate contract terms and the background law that would apply if boilerplate were not enforced, then refusing to enforce boilerplate does not solve the problem of lack of consent—it simply moves it from a lack of consent to fine-print terms to a lack of consent to gap-filling background law. The problem of the lack of consent is, therefore, one that banning boilerplate cannot solve. Instead, reform should focus on the remaining problem that boilerplate is substantively biased in favor of the firms that draft it. The solution, then, may be to allow boilerplate, but to regulate its content to ensure it offers terms that are not too slanted in the firms’ favor

Random-Matrix Ensembles for Semi-Separable Systems

Many models for chaotic systems consist of joining two integrable systems with incompatible constants of motion. The quantum counterparts of such models have a propagator which factorizes into two integrable parts. Each part can be diagonalized. The two eigenvector bases are related by an orthogonal (or unitary) transformation. We construct a random matrix ensemble that mimics this situation and consists of a product of a diagonal, an orthogonal, another diagonal and the transposed orthogonal matrix. The diagonal phases are chosen at random and the orthogonal matrix from Haar's measure. We derive asymptotic results (dimension N -> \infty) using Wick contractions. A new approximation for the group integration yields the next order in 1/N. We obtain a finite correction to the circular orthogonal ensemble, important in the long-range part of spectral correlations.Comment: 7 pages with 2 eps-figures, revised version, in press at Europhysics Letter

Structural Invariance and the Energy Spectrum

We extend the application of the concept of structural invariance to bounded time independent systems. This concept, previously introduced by two of us to argue that the connection between random matrix theory and quantum systems with a chaotic classical counterpart is in fact largely exact in the semiclassical limit, is extended to the energy spectra of bounded time independent systems. We proceed by showing that the results obtained previously for the quasi-energies and eigenphases of the S-matrix can be extended to the eigenphases of the quantum Poincare map which is unitary in the semiclassical limit. We then show that its eigenphases in the chaotic case move rather stiffly around the unit circle and thus their local statistical fluctuations transfer to the energy spectrum via Bogomolny's prescription. We verify our results by studying numerically the properties of the eigenphases of the quantum Poincare map for billiards by using the boundary integral method.Comment: 10 pages, 5 figure

State-Level and County-Level Estimates of Health Care Costs Associated with Food Insecurity.

IntroductionFood insecurity, or uncertain access to food because of limited financial resources, is associated with higher health care expenditures. However, both food insecurity prevalence and health care spending vary widely in the United States. To inform public policy, we estimated state-level and county-level health care expenditures associated with food insecurity.MethodsWe used linked 2011-2013 National Health Interview Survey/Medical Expenditure Panel Survey data (NHIS/MEPS) data to estimate average health care costs associated with food insecurity, Map the Meal Gap data to estimate state-level and county-level food insecurity prevalence (current though 2016), and Dartmouth Atlas of Health Care data to account for local variation in health care prices and intensity of use. We used targeted maximum likelihood estimation to estimate health care costs associated with food insecurity, separately for adults and children, adjusting for sociodemographic characteristics.ResultsAmong NHIS/MEPS participants, 10,054 adults and 3,871 children met inclusion criteria. Model estimates indicated that food insecure adults had annual health care expenditures that were $1,834 (95$1,073-2,595, P < .001) higher than food secure adults. For children, estimates were 80 higher, but this finding was not significant (95% CI, -$171 to$329, P = .53). The median annual health care cost associated with food insecurity was $687,041,000 (25th percentile,$239,675,000; 75th percentile, $1,140,291,000). The median annual county-level health care cost associated with food insecurity was$4,433,000 (25th percentile, $1,774,000; 75th percentile,$11,267,000). Cost variability was related primarily to food insecurity prevalence.ConclusionsHealth care expenditures associated with food insecurity vary substantially across states and counties. Food insecurity policies may be important mechanisms to contain health care expenditures

Moral Diversity and Efficient Breach

Most people think it is morally wrong to breach a contract. But sophisticated commercial parties, like large corporations, have no objection to breaching contracts and paying the price in damages when doing so is in their self-interest. The literature has ignored the profound legal, economic, and normative implications of that asymmetry between individuals’ and firms’ approaches to breach. To individuals, a contract is a promise that cannot be broken regardless of the financial stakes. For example, millions of homeowners refused to breach their mortgage contracts in the aftermath of the housing crisis even though doing so could have saved them tens or even hundreds of thousands of dollars. Their moral beliefs led homeowners to forgo opportunities for efficient breach that firms would have seized, thus exacerbating al-ready swelling wealth inequalities. This Article explains this phenomenon, identifies its consequences and examines strategies to address it. Neither ex post judicial interventions (such as adjusting the remedies for breach) nor traditional ex ante regulatory interventions (such as disclosure requirements) will effectively address the problem. Instead, the most promising approach is a novel solution based on the framework of choice architecture: requiring contracts to include an express term creating an option to exit the contract and pay a fee equivalent to expectation damages. An express exit term elevates an implicit legal option into an explicit contractual option, reframing the moral choice so individuals would perceive exiting the contract as a morally permissible performance of their promise rather than a morally forbidden breaking of it. The presence of that exit term thereby aligns individuals’ perceptions of their moral obligations under the contract with sophisticated firms’ approaches to breach. The Article concludes with new empirical evidence that demonstrates the practical impact of an exit clause. It presents the results of two experimental studies I performed that demonstrate the effectiveness of a mandatory exit clause in reducing the effects of the asymmetry between individuals and firms. Those results show that exit clauses could have substantial practical implications for the regulation of contracts in contexts like consumer and mortgage contracts