Why agents need discretion: The business judgment rule as optimal standard of care

Should managers be liable for ill-conceived business decisions? One answer is given by U.S. courts, which almost never hold managers liable for their mistakes. In this paper, we address the question in a theoretical model of delegated decision making. We find that courts should indeed be lenient as long as contracts are restricted to be linear. With more general compensation schemes, the answer depends on the precision of the court’s signal. If courts make many mistakes in evaluating decisions, they should not impose liability for poor business judgment

Unpacking Adaptability

Legal Origins Theory -- first proposed over a decade ago by Rafael La Porta, Florencio Lopez-de-Silanes, Andrei Shleifer and Robert W. Vishny -- holds that adaptable legal systems produce superior substantive law that, in turn, leads to superior economic outcomes. In this essay, we examine this adaptability hypothesis. The chief methodological challenge confronting the empirical study of adaptability is that researchers cannot measure adaptability directly. Legal Origins Theory attempts to surmount this challenge, in the first instance, by using legal institutions as proxies for adaptability. One of the foundational assumptions of Legal Origins Theory is that courts engage in highly contextualized rulemaking that improves the quality of law over time. Legal Origins Theory then takes this assumption one step further, asserting that “judicial law making and adaptation play a greater role in common than in civil law.” Thus, legal origin becomes a second-order proxy for adaptability. We contend that adaptability is undertheorized and that a more nuanced understanding of adaptability reveals the implausibility of legal origin as proxy for adaptability

Unpacking Adaptability

Legal Origins Theory -- first proposed over a decade ago by Rafael La Porta, Florencio Lopez-de-Silanes, Andrei Shleifer and Robert W. Vishny -- holds that adaptable legal systems produce superior substantive law that, in turn, leads to superior economic outcomes. In this essay, we examine this adaptability hypothesis. The chief methodological challenge confronting the empirical study of adaptability is that researchers cannot measure adaptability directly. Legal Origins Theory attempts to surmount this challenge, in the first instance, by using legal institutions as proxies for adaptability. One of the foundational assumptions of Legal Origins Theory is that courts engage in highly contextualized rulemaking that improves the quality of law over time. Legal Origins Theory then takes this assumption one step further, asserting that “judicial law making and adaptation play a greater role in common than in civil law.” Thus, legal origin becomes a second-order proxy for adaptability. We contend that adaptability is undertheorized and that a more nuanced understanding of adaptability reveals the implausibility of legal origin as proxy for adaptability

Reporting of Randomized Controlled Trials in Hodgkin Lymphoma in Biomedical Journals

Background: Randomized controlled trials (RCTs) are the best tool to evaluate the effectiveness of clinical interventions. The Consolidated Standards for Reporting Trials (CONSORT) statement was introduced in 1996 to improve reporting of RCTs. We aimed to determine the extent of ambiguity and reporting quality as assessed by adherence to the CONSORT statement in published reports of RCTs involving patients with Hodgkin lymphoma from 1966 through 2002. Methods: We analyzed 242 published full-text reports of RCTs in patients with Hodgkin lymphoma. Quality of reporting was assessed using a 14-item questionnaire based on the CONSORT checklist. Reporting was studied in two pre-CONSORT periods (1966-1988 and 1989-1995) and one post-CONSORT period (1996-2002). Results: Only six of the 14 items were addressed in 75% or more of the studies in all three time periods. Most items that are necessary to assess the methodologic quality of a study were reported by fewer than 20% of the studies. Improvements over time were seen for some items, including the description of statistics methods used, reporting of primary research outcomes, performance of power calculations, method of randomization and concealment allocation, and having performed intention-to-treat analysis. Conclusions: Despite recent improvements, reporting levels of CONSORT items in RCTs involving patients with Hodgkin lymphoma remain unsatisfactory. Further concerted action by journal editors, learned societies, and medical schools is necessary to make authors even more aware of the need to improve the reporting RCTs in medical journals to allow assessment of validity of published clinical researc

Norms, Rationality, and Communication: A Reputation Theory of Social Norms

Does the discovery of law and social norms necessitate breaking with the rational choice paradigm? In this paper, I argue for an answer in the negative. To this end, I propose a reputation theory of social norms, which differs from other proposals in two principal respects: First, it explains norms without any assumption of behavioral constraints (like habit or conscience) and normative motivations (like altruism or aspiration to esteem). Second, it does even without any assumption regarding model-exogenous, private information that most other reputation and signaling explanations use (such as the discount rate in Eric Posner\u27s signaling model). Instead, reputation theory analyzes norms as mere social constructs: In strategic situations, rationality fails to provide clear guidance on how to play. Because individuals must nonetheless make decisions, they follow norms. Yet norms are susceptible to strategic manipulation; they can be destabilized by promulgating different norms. Two factors make norms stable in spite of that threat: network effects and preference compatibility. These two factors favor cooperative reputation norms, i.e., norms that foster exchanges among few individuals. More excitingly, network effects and preference compatibility also support norms that overcome collective action problems. Thus, the reputation theory of social norms is an additional way of resolving one of the anomalies of rational choice analysis - the fact that collective action exists

Expanded use of rituximab in the management of non-Hodgkin lymphoma

Rituximab is a chimeric monoclonal antibody targeting the B cell antigen CD20. Since its first approval for clinical use in 1997, rituximab has become an inherent part of the treatment of CD20-positive lymphoma. In previously untreated non-Hodgkin lymphoma (NHL) conventional chemotherapy supplemented by rituximab (R-chemotherapy) was shown to be more effective than chemotherapy alone. This holds true for indolent as well as aggressive NHL. Rituximab was also shown to be beneficial when used as maintenance therapy or part of salvage and re-induction regimens in relapsed NHL. Administration of rituximab is generally well tolerated. The most common side effects including fever, urticaria and bronchospasm are mostly mild, treatable and restricted to the infusion period. Thus, rituximab can usually be administered in an outpatient setting. Due to its favorable effect/side effect ratio, clinical trials are currently evaluating a possible role for rituximab in several other diseases such as Hodgkin lymphoma (HL) and non-malignant autoimmune disorders. This review aims at giving an overview of the pharmacological properties of rituximab and summarizing key publications and recent literature on its use in NHL

Market Standards in Financial Contracting: The Euro’s Effect on Choice of Law in European Debt Securities

The introduction of the Euro ushered in a rise to dominance of English contract law in European debt securities. Corporate issuers in the Euro zone chose English law significantly more often than a control group from other European countries. The Euro effect on choice of law is particularly strong for debt securities in local markets that, arguably, were most affected by the Euro. The Euro effect is not explained by differences in the suitability of English law compared to other laws, a change in issuer composition or debt securities types, and the greater market share of British and American underwriters. We argue that increased standardization benefits (network effects) from a boost in cross-border investment provide the best account of why English law conquered the European debt securities market

Reporting of randomized controlled trials in Hodgkin lymphoma in biomedical journals

BACKGROUND: Randomized controlled trials (RCTs) are the best tool to evaluate the effectiveness of clinical interventions. The Consolidated Standards for Reporting Trials (CONSORT) statement was introduced in 1996 to improve reporting of RCTs. We aimed to determine the extent of ambiguity and reporting quality as assessed by adherence to the CONSORT statement in published reports of RCTs involving patients with Hodgkin lymphoma from 1966 through 2002. METHODS: We analyzed 242 published full-text reports of RCTs in patients with Hodgkin lymphoma. Quality of reporting was assessed using a 14-item questionnaire based on the CONSORT checklist. Reporting was studied in two pre-CONSORT periods (1966-1988 and 1989-1995) and one post-CONSORT period (1996-2002). RESULTS: Only six of the 14 items were addressed in 75% or more of the studies in all three time periods. Most items that are necessary to assess the methodologic quality of a study were reported by fewer than 20% of the studies. Improvements over time were seen for some items, including the description of statistics methods used, reporting of primary research outcomes, performance of power calculations, method of randomization and concealment allocation, and having performed intention-to-treat analysis. CONCLUSIONS: Despite recent improvements, reporting levels of CONSORT items in RCTs involving patients with Hodgkin lymphoma remain unsatisfactory. Further concerted action by journal editors, learned societies, and medical schools is necessary to make authors even more aware of the need to improve the reporting RCTs in medical journals to allow assessment of validity of published clinical research