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Journal ArticleDOI

What Do Judges and Justices Maximize? (The Same Thing Everybody Else Does)

01 Jan 1993-Supreme Court Economic Review (George Mason University Press)-Vol. 3, pp 1-41
TL;DR: In this article, a positive economic theory of the behavior of appellate judges and Justices is presented, arguing that the effort to insulate judges from significant economic incentives, through devices such as life tenure and stringent conflict of interest rules has not rendered judicial behavior immune to economic analysis.
Abstract: This article presents a positive economic theory of the behavior of appellate judges and Justices. The essay argues that the effort to insulate judges from significant economic incentives, through devices such as life tenure and stringent conflict of interest rules, has not rendered judicial behavior immune to economic analysis. Drawing on analogies to the managers of non-profit enterprises, to those who vote in political elections, and to theatrical spectators, the essay models the judicial utility function in terms that allows judges to be seen as ordinary people responding rationally to ordinary incentives. This model provides a theoretical alternative to the common view of judges as Prometheans or saints, and it suggests new ways of looking at such practical issues as the design of the judicial compensation system.

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Posted Content
TL;DR: This paper found evidence that a large portion of the effect of homeownership on these investments may come from lower mobility rates for homeowners, and that areas with more homeowners have lower government spending, but spend a larger share of their government budget on education and highways.
Abstract: Individuals invest in their local environments by volunteering, getting involved in local government, becoming informed about their political leaders, joining non-professional organizations and even gardening. Homeownership may encourage these investments because homeownership gives individuals an incentive to improve their community and because homeownership creates barriers to mobility. Using the U.S. General Social Survey document that homeowners are more likely to invest in social capital, and a simple instrumental variables strategy suggests that the relationship may be causal. While our results are not conclusive, we find evidence that a large portion of the effect of homeownership on these investments may come from lower mobility rates for homeowners. Using the German Socio-Economic Panel homeownership and citizenship controlling for individual fixed effects. Finally, across cities and counties, areas with more homeowners have lower government spending, but spend a larger share of their government budget on education and highways.

1,200 citations

Posted Content
TL;DR: In this paper, a broad vision of how law and economics analysis may be improved by increased attention to insights about actual human behavior is presented, including cognitive and motivational problems of both citizens and government.
Abstract: Economic analysis of law usually proceeds under the assumptions of neoclassical economics. But empirical evidence gives much reason to doubt these assumptions; people exhibit bounded rationality, bounded self-interest, and bounded willpower. This article offers a broad vision of how law and economics analysis may be improved by increased attention to insights about actual human behavior. It considers specific topics in the economic analysis of law and proposes new models and approaches for addressing these topics. The analysis of the article is organized into three categories: positive, prescriptive, and normative. Positive analysis of law concerns how agents behave in response to legal rules and how legal rules are shaped. Prescriptive analysis concerns what rules should be adopted to advance specified ends. Normative analysis attempts to assess more broadly the ends of the legal system: Should the system always respect people's choices? By drawing attention to cognitive and motivational problems of both citizens and government, behavioral law and economics offers answers distinct from those offered by the standard analysis.

1,111 citations

Journal ArticleDOI
TL;DR: The authors found evidence that homeownership may encourage investment in local amenities and social capital, and that a large portion of the effect of homeownership on these investments comes from lower mobility rates for homeowners.

1,024 citations

Journal ArticleDOI
TL;DR: The idea of libertarian paternalism might seem to be an oxymoron, but it is both possible and legitimate for private and public institutions to affect behavior while also respecting freedom of choice as mentioned in this paper.
Abstract: The idea of libertarian paternalism might seem to be an oxymoron, but it is both possible and legitimate for private and public institutions to affect behavior while also respecting freedom of choice. Often people’s preferences are ill-formed, and their choices will inevitably be influenced by default rules, framing effects, and starting points. In these circumstances, a form of paternalism cannot be avoided. Equipped with an understanding of behavioral findings of bounded rationality and bounded self-control, libertarian paternalists should attempt to steer people’s choices in welfare-promoting directions without eliminating freedom of choice. It is also possible to show how a libertarian paternalist might select among the possible options and to assess how much choice to offer. Examples are given from many areas, including savings behavior, labor law, and consumer protection.

947 citations

Journal ArticleDOI
TL;DR: In this article, the authors used cross-sectional time-series data for U.S. counties from 1977 to 1992 to find that allowing citizens to carry concealed weapons deters violent crimes, without increasing accidental deaths.
Abstract: Using cross‐sectional time‐series data for U.S. counties from 1977 to 1992, we find that allowing citizens to carry concealed weapons deters violent crimes, without increasing accidental deaths. If those states without right‐to‐carry concealed gun provisions had adopted them in 1992, county‐ and state‐level data indicate that approximately 1,500 murders would have been avoided yearly. Similarly, we predict that rapes would have declined by over 4,000, robbery by over 11,000, and aggravated assaults by over 60,000. We also find criminals substituting into property crimes involving stealth, where the probability of contact between the criminal and the victim is minimal. Further, higher arrest and conviction rates consistently reduce crime. The estimated annual gain from all remaining states adopting these laws was at least $5.74 billion in 1992. The annual social benefit from an additional concealed handgun permit is as high as $5,000.

776 citations

References
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Journal ArticleDOI
TL;DR: The entire structure of the Federal Rules of Civil Procedure calls for sequential decision-making as mentioned in this paper, and a bifurcated or ''sequential'' trial on liability and damages, as opposed to a unified trial on both issues, is the exception rather than the norm.
Abstract: WHEN Polaroid successfully sued Kodak for infringing its patents on instant photography, the question of damages was litigated in a separate trial before a different judge than the one who found Kodak liable for patent infringement.' A bifurcated or \"sequential\" trial on liability and damages, as opposed to a \"unitary\" trial on both issues, is the exception rather than the norm. A sequential trial is not limited to separating liability and damages. Indeed, the entire structure of the Federal Rules of Civil Procedure calls for sequential decision making. The parties first may litigate whether the court has jurisdiction over the matter (Rule 12(b)(1)) or over the defendant (Rule 12(b)(2)) and, if it does, whether each element of the complaint states a claim under which relief can be granted (Rule 12(b)(6)). Next, the parties may litigate summary-judgment motions (Rule 56). Rule 42(b) gives courts wide discretion to separate substantive issues. These include bifurcating liability and damages, separating claims asserted by the plaintiff, separating counterclaims raised by the defendant, deciding whether a contract exists before considering claims based on its existence, and deciding whether a product-liability defendant manufactured the allegedly defective product before considering liability and

376 citations

Journal ArticleDOI
TL;DR: One of the most controversial questions in copyright law today concerns the proper scope of protection for unpublished works, such as letters, diaries, journals, reports, or drafts that the copyright owner may publish in the future.
Abstract: ONE Of the more controversial questions in copyright law today concerns the proper scope of protection for unpublished works, such as letters, diaries, journals, reports, or drafts that the copyright owner may publish in the future. The question is not whether such works are copyrightable, for they surely are. Rather, it is whether such works should be given, as they are today, stronger copyright protection than published or widely disseminated works. Interest in this area of copyright law is the result of several recent and widely discussed cases. In Harper & Row v. Nation Interprises,' an unnamed source provided the Nation magazine with galleys of the soon-to-be published memoirs of Gerald Ford. Paraphrasing and quoting from the memoirs, the Nation rushed into print what it believed to be a "hot" article on Ford's decision to pardon Richard Nixon. Harper & Row had earlier sold prepublication rights to Time magazine for $25,000, but, after the Nation's article appeared, Time canceled its contract to publish excerpts from the forthcoming memoirs. In ruling against the Nation, the Supreme Court held that the unpublished nature of the work was a key factor negating a defense of fair use. Two more recent cases involved the rights of biographers to quote

318 citations

Journal ArticleDOI
TL;DR: The Modigliani-Miller Theorem on the irrelevance of corporate capital structure is perhaps the best-known result in modern finance as discussed by the authors, which states that, under certain assumptions, the market value of a firm is independent of its capital structure.
Abstract: The Modigliani-Miller Theorem on the irrelevance of corporate capital structure is perhaps the best-known result in modern finance Simply put, the theorem states that, under certain assumptions, the market value of a firm is independent of its capital structure Under the stylized assumptions of the theorem, substituting equity for debt or adding layers of debt to the capital structure of a firm, as occurred during much of the 1980s, has no affect on the firm's value' The theorem applies not only to the mix of debt and equity, but also to the mix of debt itself, such as between secured and unsecured or senior and subordinated debt2 Understanding existing patterns of debt and equity therefore begins with the Modigliani-Miller Theorem One must identify which of the theorem's assumptions do not hold and explain why relaxing them leads to the patterns of debt and equity that currently exist Much scholarship has examined the assumption that changes in capital structure do not affect the way in which a firm uses its assets3 There is little reason to think that this assumption is true It is now well-understood that equityholders may choose different projects if debt is present than they would otherwise: equityholders enjoy all of the benefits of successful projects but share the losses from unsuccessful ventures with creditors

235 citations