False Efficiency and Missed Opportunities in Law and Economics

This Article points out a simple flaw common to many law-and-economics analyses, ranging from fundamental models like the Hand Formula to narrower arguments like those that oppose the doctrine of unconscionability. The flaw is straightforward: economic analyses of law often assume, either implicitly or explicitly that when it is more efficient for an activity to occur than for it not to occur it is efficient for legal rules to encourage the activity. Even on grounds of efficiency alone, however, knowing in isolation whether an activity produces more wealth than its absence is insufficient to conclude that the activity is efficient. The determination of efficient legal rules requires an answer to a further question too often neglected by legal economists: what are the activity\u27s alternatives? Even if an activity is more efficient than its absence, it may produce less wealth (perhaps significantly less wealth) than its alternatives, once its harms are taken into account. Encouraging all activities that appear to produce wealth on their own runs the risk of encouraging opportunistic behavior whose effect is more to transfer wealth than to create it. As a simple example, a legal regime that followed the Hand Formula would encourage businesses to earn $100,000 by causing$95,000 worth of unavoidable harms to others; that incentive alone, while probably objectionable for other reasons, is not inefficient because, instrumentally speaking, the $100,000 social gains justify the$95,000 social losses. But a rule based on the Hand Formula would also encourage economic actors to engage in that $100,000-earning activity rather than one that paid$90,000 but caused no harms; that incentive is inefficient. Some economic analyses acknowledge related points, but the law-and-economics movement insufficiently understands the flaw that this Article describes. Similarly critics of the law-and-economics movement -- while aware of other fundamental flaws in legal-economic analysis, such as the inapplicability of the rational-actor model in many circumstances -- do not readily enough engage economic models on their own terms. This Article attempts to remedy those oversights, and in doing so, it suggests greater caution in applying economic reasoning to law

Rational Ignorance, Rational Closed-Mindedness, and Modern Economic Formalism in Contract Law

This article considers the relevance of several kinds of post-offense events for the justice of punishment under a fair-play account of retributivism. If the justice of punishment depends on something like an offender-centered tally of benefits and burdens, it may be difficult to explain why offenders should be punished by a criminal justice system in situations where they have been punished privately or have lost the relevant benefits they may have received from their offenses. My fault is past. But, O, what form of prayer Can serve my turn? \u27Forgive me my foul murder? That cannot be; since I am still possess\u27d Of those effects for which I did the murder, My crown, mine own ambition and my queen. May one be pardon\u27d and retain the offence? -King Claudius, Hamlet, Act III, Sc. II

Contract Meta-Interpretation

This Article provides a general framework for resolving the contract law’s ambivalence between textualism and contextualism, one of the most difficult questions in modern contract interpretation. Simply put, the Article’s argument is that courts need to determine the parties’ preferences as to how their contracts should be interpreted; this “meta-interpretive” inquiry can then direct the court’s interpretation or construction of the parties’ substantive rights and duties. Moreover, the Article argues that while contextualist interpretation is not, and should not be, mandatory for all interpretive questions under contract law, contextualism is necessary to resolve the initial “meta-interpretive” question: What interpretive regime do the parties prefer? Recognizing this distinction, and applying this twostep inquiry, can resolve some of the academic and practical debates between textualists and contextualists, and it can also explain some features of modern contract law

Dynamic Common Law and Technological Change: The Classification of Bitcoin

Most legal analysis of Bitcoin has addressed public-law and regulatory matters, such as taxation, securities regulation, and money laundering. This essay considers some questions that Bitcoin raises from a private-law perspective, and it aims to show that technological innovation may highlight problems with conceptualistic, classical rules of private law

Are Autonomous Entities Possible?

Over the last few years, I have demonstrated how modern business-entity statutes, particularly LLC statutes, can give software the basic capabilities of legal personhood, such as the ability to enter contracts or own property. Not surprisingly, this idea has been met with some resistance. This Essay responds to one kind of descriptive objection to my arguments: That courts will find some way to prevent the results I describe either because my reading of the business-entity statutes would take us too far outside our legal experience, or because courts will be afraid that robots will take over the world, or because law is meant to promote human (versus nonhuman) rights. As I demonstrate in this essay, such objections are not correct as a descriptive matter. These arguments make moral and policy assumptions that are probably incorrect, face intractable line-drawing problems, and dramatically overestimate the ease of challenging statutorily valid business structures. Business-entity law has always accommodated change, and the extensions to conventional law that I have identified are not as radical as they seem. Moreover, the transactional techniques I advocate for would likely just need to succeed in one jurisdiction, and regardless, there are many alternative techniques that, practically speaking, would achieve the same results

Implied Organizations and Technological Governance

Common law historically adapted creatively and gracefully to the emergence of new types of organizations. Today, statutory forms of organizations predominate. But statutory organizational forms may be ill-suited to govern the novel, loosely coupled, and rapidly changing organizations that can arise through distributed technological mechanisms. This Article suggests that the common law of implied organizations can be a fertile ground for legal responses to technological organizations and indeed may be important not just for regulating such organizations but for giving them important legal capabilities

The Significance of Private Burdens and Lost Benefits for a Fair-Play Analysis of Punishment

This article considers the relevance of several kinds of post-offense events for the justice of punishment under a fair-play account of retributivism. If the justice of punishment depends on something like an offender-centered tally of benefits and burdens, it may be difficult to explain why offenders should be punished by a criminal justice system in situations where they have been punished privately or have lost the relevant benefits they may have received from their offenses. My fault is past. But, O, what form of prayer Can serve my turn? \u27Forgive me my foul murder? That cannot be; since I am still possess\u27d Of those effects for which I did the murder, My crown, mine own ambition and my queen. May one be pardon\u27d and retain the offence? -- King Claudius, Hamlet, Act III, Sc. II