How do Securities Laws Influence Affect, Happiness, & Trust?

This Article advocates that securities regulators promulgate rules based upon taking into consideration their impacts upon investors\u27 and others\u27 affect, happiness, and trust. Examples of these impacts are consumer optimism, financial stress, anxiety over how thoroughly securities regulators deliberate over proposed rules, investor confidence in securities disclosures, market exuberance, social moods, and subjective well-being. These variables affect and are affected by traditional financial variables, such as consumer debt, expenditures, and wealth; corporate investment; initial public offerings; and securities market demand, liquidity, prices, supply, and volume. This Article proposes that securities regulators can and should evaluate rules based upon measures of affect, happiness, and trust in addition to standard observable financial variables. This Article concludes that the organic statutes of the United States Securities and Exchange Commission are indeterminate despite mandating that federal securities laws consider efficiency among other goals. This Article illustrates analysis of affective impacts of these financial regulatory policies: mandatory securities disclosures; gun-jumping rules for publicly registered offerings; financial education or literacy campaigns; statutory or judicial default rules and menus; and continual reassessment and revision of rules. These regulatory policies impact and are impacted by investors\u27 and other people\u27s affect, happiness, and trust. Thus, securities regulators can and should evaluate such affective impacts to design effective legal policy

Real Options in Law: (Possibly, Frivolous) Litigation and Other Applications

This Article advances the thesis that real options are not only ubiquitous in law, but also provide novel insights about legal decision making, doctrines and rules. An introduction provides a brief a primer about financial options, real options, and real options in law. Part I of this Article develops implications of the fact that every lawsuit contains a sequence of real options for the plaintiff to unilaterally abandon that lawsuit. Part II of this Article appraises the limitations of game-theoretic analysis of the abandonment options embedded in litigation and some responses to such limitations. Part III of this Article illustrates how to apply real options analysis to provide insights over numerous legal areas, including the “calculus” of negligence and the Hand formula; collateral estoppel and res judicata; constitutional amendments; judicial minimalism; and marriage or divorce statutes. A conclusion summarizes the insights of the novel real options approach to law advanced in this Article. An appendix develops a general mathematical sequential real abandonment options game-theoretic model of (possibly, frivolous) litigation. This analytical model demonstrates how the real abandonment option values in (possibly, frivolous) litigation determine a set of necessary and sufficient conditions for the sequential credibility of (possibly, frivolous) litigation and derives Nash equilibrium settlement values

Emotional Adaptation and Lawsuit Settlements

In Hedonic Adaptation and the Settlement of Civil Lawsuits, Professors John Bronsteen, Christopher Buccafusco, and Jonathan Masur note an unexplored aspect of protracted lawsuits: During prolonged litigation tort victims can adapt emotionally to even permanent injuries, and therefore are more likely to settle--and for less--than if their lawsuits proceeded faster. This Response demonstrates that this is a facile application of hedonic adaptation with the following three points. First, people care about more than happiness: Tort victims may sue to seek justice or revenge; emotions in tort litigation can be cultural evaluations; and people are often motivated by identity and meaning. Also, if plaintiffs fear losing litigation options, they are less likely to settle--and for more--than if their lawsuits proceeded faster. Second, adaptation can be slow and remain incomplete after many years. Third, fostering emotional adaptation by lengthy tort litigation raises ethical and normative questions

Securities Price Risks and Financial Derivative Markets

The financial and popular media report almost daily on the volatility of securities market prices. Yet, many people continue to buy securities to hedge against or speculate on certain risks. People can also buy or sell derivatives to hedge against or speculate on fluctuations in securities prices. This Article discusses three regulatory policy implications of utilizing derivatives markets to reallocate the bearing of securities price risks. First, if there are too few non-redundant derivative markets, a competitive market equilibrium allocation of securities price risks is typically constrained Pareto inefficient. This financial economic result means that for typical economies, a regulator can in principle improve social welfare by financial market interventions. Second, introducing some but not enough non-redundant derivatives markets has indeterminate normative consequences for the allocation of securities price risks. This financial economic result means that for typical economies, introducing a new derivative market can improve, worsen, or have no effect on the welfare of consumers and investors. Finally, government regulation might not improve the social allocation of securities price risks because of informational or political economy obstacles. This financial economic result means that for typical economies, the ability of regulatory intervention may be constrained by limited knowledge

Tiger Cub Strikes Back: Memoirs of an Ex-Child Prodigy About Legal Education and Parenting

I am a Chinese American who at 14 enrolled at Princeton and at 17 began my applied mathematics Ph.D. at Harvard. I was a first-year law student at the University of Chicago before transferring to Stanford, preferring the latter\u27s pedagogical culture. This Article offers a complementary account to Amy Chua\u27s parenting memoir. The Article discusses how mainstream legal education and tiger parenting are similar and how they can be improved by fostering life-long learning about character strengths, emotions, and ethics. I also recount how a senior professor at the University of Pennsylvania law school claimed to have gamed the U.S. News & World Report law school rankings

Anti-Asian American Racism, COVID-19, Racism Contested, Humor, and Empathy

This Article analyzes the history of anti-Asian American racism. This Article considers how anger, fear, and hatred over COVID-19 fueled the increase of anti-Asian American racism. This Article introduces the phrase, racism contested, to describe an incident where some people view racism as clearly involved, while some people do not. This Article critiques respectability politics for being an ineffective response to racism. This Article proposes how to utilize humor to engage non-violent racism. This Article studies how to achieve DEI (Diversity, Equity, and Inclusion) by Empathy Through Personal Perspective Pivoting (ETPPP)

Regulating Irrational Exuberance and Anxiety in Securities Markets

This paper analyzes the regulatory implications of irrational exuberance and anxiety in securities markets. U.S. federal securities laws mandate the disclosure of certain information, but regulate only the cognitive form and content of that information. An important and unstudied question is how to regulate securities markets where some investors respond not only cognitively to the form and content of information, but also emotionally to the form and content of information. This paper investigates that question when some investors feel exuberance or anxiety that is unjustified by cognitive processing of the available information. This paper develops the implications for mandatory securities disclosure of irrational exuberance and anxiety