Fairness, Efficiency and Insider Trading: Deconstructing the Coin of the Realm in the Information Age

Whether and how the federal securities laws should restrict insider trading is one of the most hotly debated topics in the securities law literature. Paradoxically, both the theoretical analysis and the legal rules concerning insider trading remain extraordinarily vague and ill-formed. What is the special character of insider trading that leads to this apparently irresolvable puzzle? In this Article, I argue that there is, in fact, nothing special about insider trading that creates this dilemma, but rather there is something special about the nature of information itself. Accordingly, this theoretical dilemma is not limited to insider trading regulation, but rather pervades all areas of intellectual property law. In this Article, I situate insider trading regulation within the larger body of intellectual property law by discussing three potential allocations of the property right in valuable inside information. First, inside information could be treated as a public resource, meaning that a person in possession of inside information could not legally exploit that advantage for personal profit. Such a regime would forbid some or all insider trading by forcing the disclosure to the marketplace of inside information prior to trading. I argue that regulators should reject this alternative because, despite it\u27s proponents\u27 tendency to justify the rule in terms of fairness, this proposal is unlikely to foster fairness in any meaningful way. Alternatively, the property right in valuable inside information could belong to issuers, as the producers of such information. I argue that regulators should reject this alternative because, despite its proponents? tendency to frame their arguments in terms of promoting informational efficiency, a legal regime treating inside information as the property of the issuer is unlikely to further that goal. In fact, such proposals assume an affirmative answer to a question that is fiercely debated in other areas of intellectual property law: does creating a property right in information producers incentivize additional production to the extent necessary to offset the social costs of excluding others from use of the information? Finally, the property right in valuable inside information could reside with outsider traders (traders who possess inside information, but are neither insiders nor constructive insiders of the issuer). I argue that regulators should pursue this alternative because, although there is no need to encourage issuers to create valuable inside information, the need to encourage the dissemination of such information to the marketplace has been recognized for many years. Accordingly, I propose in this Article a system of federal securities regulation that would permit trading by corporate outsiders who did not receive their information in a tip from an insider or constructive insider. Such a system, I argue, provides the hope of filling in the gaps left by the current disclose or abstain system, by encouraging the reflection of material information in stock market price without disclosure of the actual inside information. At the same time, this proposal avoids the perverse incentives and negative impacts on market efficiency attendant in a system that permits insider trading by corporate employees

The relationships between internal and external threat and right-wing attitudes: A three-wave longitudinal study

The interplay between threat and right-wing attitudes has received much research attention, but its longitudinal relationship has hardly been investigated. In this study, we investigated the longitudinal relationships between internal and external threat and right-wing attitudes using a cross-lagged design at three different time points in a large nationally representative sample (N = 800). We found evidence for bidirectional relationships. Higher levels of external threat were related to higher levels of Right-Wing Authoritarianism and to both the egalitarianism and dominance dimensions of Social Dominance Orientation at a later point in time. Conversely, higher levels of RWA were also related to increased perception of external threat later in time. Internal threat did not yield significant direct or indirect longitudinal relationships with right-wing attitudes. Theoretical and practical implications of these longitudinal effects are discussed

Computer Games Are Serious Business and so is their Quality: Particularities of Software Testing in Game Development from the Perspective of Practitioners

Over the last several decades, computer games started to have a significant impact on society. However, although a computer game is a type of software, the process to conceptualize, produce and deliver a game could involve unusual features. In software testing, for instance, studies demonstrated the hesitance of professionals to use automated testing techniques with games, due to the constant changes in requirements and design, and pointed out the need for creating testing tools that take into account the flexibility required for the game development process. Goal. This study aims to improve the current body of knowledge regarding software testing in game development and point out the existing particularities observed in software testing considering the development of a computer game. Method. A mixed-method approach based on a case study and an opinion survey was applied to collect quantitative and qualitative data from software professionals regarding the particularities of software testing in game development. Results. We analyzed over 70 messages posted on three well-established network of question-and-answer communities related to software engineering, software testing and game development and received answers of 38 professionals discussing differences between testing a computer game and a general software, and identified important aspects to be observed by practitioners in the process of planning, performing and reporting tests in this context. Conclusion. Considering computer games, software testing must focus not only on the common aspects of a general software, but also, track and investigate issues that could be related to game balance, game physics and entertainment related-aspects to guarantee the quality of computer games and a successful testing process

Doctors and Drug Companies: Still Cozy after All These Years

David Henry discusses a research article by Geoffrey Spurling and colleagues that examined the relationship between exposure to promotional material from pharmaceutical companies and the quality, quantity, and cost of prescribing

Accounting for unequal access to higher education: the role of social identity factors

Western societies stress the potential for anyone, irrespective of social background, to improve their position within society. However, disadvantaged students face barriers in gaining a good education. Two studies in secondary schools show how perceptions of identity compatibility and anticipated fit influence students’ university choices. It was found that relatively disadvantaged students scored lower on identity compatibility, and that low scores on identity compatibility were associated with lower anticipated fit at a local selective (Study 1) or highly selective (Study 2) university. Anticipated fit, in turn, predicted the type of university to which participants wanted to apply; those who anticipated fitting in more at selective universities were more likely to apply to higher status universities. These relations were significant while controlling for academic achievement. Together, these studies suggest that social identity factors play a relevant role in explaining higher education choices among low-status group members

Risk-shifting Through Issuer Liability and Corporate Monitoring

This article explores how issuer liability re-allocates fraud risk and how risk allocation may reduce the incidence of fraud. In the US, the apparent absence of individual liability of officeholders and insufficient monitoring by insurers under-mine the potential deterrent effect of securities litigation. The underlying reasons why both mechanisms remain ineffective are collective action problems under the prevailing dispersed ownership structure, which eliminates the incentives to moni-tor set by issuer liability. This article suggests that issuer liability could potentially have a stronger deterrent effect when it shifts risk to individuals or entities holding a larger financial stake. Thus, it would enlist large shareholders in monitoring in much of Europe. The same risk-shifting effect also has implications for the debate about the relationship between securities litigation and creditor interests. Credi-tors’ claims should not be given precedence over claims of defrauded investors (e.g., because of the capital maintenance principle), since bearing some of the fraud risk will more strongly incentivise large creditors, such as banks, to monitor the firm in jurisdictions where corporate debt is relatively concentrated

Mental models of high reliability systems

Reliable performance in complex systems is determined in part by the ade quacy with which mental models of the system capture accurately the dimen sions of system coupling and system complexity. Failure to register coupling and complexity leads the observer to intervene into an imagined technology that does not exist and to convert opportunities for error into actual errors. To decrease the frequency with which this conversion occurs, people can make their models more complex or the systems they monitor less complex. Neither type of change is as daunting as it may appear, and this is illustrated by an analysis of the mental model and system design associated with the invasion of Grenada.Peer Reviewedhttp://deepblue.lib.umich.edu/bitstream/2027.42/68652/2/10.1177_108602668900300203.pd

Negative emotional stimuli reduce contextual cueing but not response times in inefficient search

In visual search, previous work has shown that negative stimuli narrow the focus of attention and speed reaction times (RTs). This paper investigates these two effects by first asking whether negative emotional stimuli narrow the focus of attention to reduce the learning of a display context in a contextual cueing task and, second, whether exposure to negative stimuli also reduces RTs in inefficient search tasks. In Experiment 1, participants viewed either negative or neutral images (faces or scenes) prior to a contextual cueing task. In a typical contextual cueing experiment, RTs are reduced if displays are repeated across the experiment compared with novel displays that are not repeated. The results showed that a smaller contextual cueing effect was obtained after participants viewed negative stimuli than when they viewed neutral stimuli. However, in contrast to previous work, overall search RTs were not faster after viewing negative stimuli (Experiments 2 to 4). The findings are discussed in terms of the impact of emotional content on visual processing and the ability to use scene context to help facilitate search