Idei contemporane-U. Mich. Law & Ec. Working Paper Series

Aaron S. Edlin (bepress)anunta citeva noi articole in seria University of Michigan John M. Olin Center for Law & Economics Working Paper Series,din care publicam mai jos citeva "for the record".

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EDITOR: Omri Ben-Shahar, Professor of Law and Economics,
University of Michigan
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ABSTRACTS:

Laura N. Beny, "Do Insider Trading Laws Matter? Some Preliminary Comparative Evidence" (November 16, 2004).
University of Michigan Legal Working Paper Series. University of Michigan John M. Olin Center for Law & Economics Working Paper Series. Working Paper 35.

ABSTRACT:

Despite the longstanding insider trading debate, there is little empirical research on insider trading laws, especially in a comparative context. The article attempts to fill that gap. I find that countries with more prohibitive insider trading laws have more diffuse equity ownership, more accurate stock prices, and more liquid stock markets. These findings are generally robust to controlling for measures of disclosure and enforceability and suggest that formal insider trading laws (especially their deterrent components)matter to stock market development.
The article suggests further avenues of empirical research on the specific mechanisms through which insider trading laws might matter and the political economy of their adoption.

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Kai-Uwe Kuhn, "Economic Theories of Bundling and their Policy Implications in Abuse Cases: An Assessment in Light of the Mircrosoft Case" (September 1, 2004). University of Michigan Legal Working Paper Series. University of Michigan John M. Olin Center for Law & Economics Working Paper Series. Working Paper 33.

Omri Ben-Shahar, "An Ex-Ante View of the Battle of the Forms: Inducing Parties to Draft Reasonable Terms" (October 1, 2004). University of Michigan Legal Working Paper Series. University of Michigan John M. Olin Center for Law & Economics Working Paper Series. Working Paper 32.

ABSTRACT:

This paper focuses on one type of ex-ante effect of the battle of the forms: the incentive to draft reasonable boilerplate terms. It argues that the experience with the battle-of-the-forms rule under the CISG reinforces what we already know, that existing legal solutions do not provide any incentive for the parties to draft reasonable forms.
The paper suggests that the goal of inducing parties to draft reasonable terms can be significantly promoted by a third rule, a variant of the "best-shot" rule proposed by Victor Goldberg. Under the version labeled the "reasonable-shot" rule, the court would resolve the battle of the forms by choosing the form that contains the more efficient terms. The paper proposes some guidelines how the "reasonable shot" could be identified by the court, and argues that there are good reasons to expect that this regime would give parties the incentive to draft reasonable terms. In fact, it is plausible that under this rule the parties' forms would converge and the battle of the forms would cease to exist.

Oren Gazal, "Screening, Plea Bargains and the Innocent Problem" (November 4, 2004). University of Michigan Legal Working Paper Series. University of Michigan John M. Olin Center for Law & Economics Working Paper Series. Working Paper 31.

ABSTRACT:

Courts in common law countries reject plea-agreements only when the agreed upon sentence is seen as exceedingly lenient. This judicial intervention is designed to ensure that plea-bargaining does not undermine deterrence. Many legal scholars argue against this policy, claiming that courts should prohibit plea-bargaining all together. They argue that the plea-bargaining system increases the risk of wrongful convictions. Economists often criticize this judicial intervention as well, but for a different reason.
Rather than advocating the abolition of plea-bargaining, many economists argue that the courts should accept all plea-agreements without review. They claim that plea-bargaining can help ensure an efficient use of prosecutorial resources and thus help maximize deterrence.
In the paper, I will argue that a plea-bargaining system that includes judicial review is superior to both of these suggested alternatives. Moreover, I will show that the prohibition of exceedingly lenient sentences is justified, not because it ensures appropriate deterrence, but because it can reduce the risk of wrongful convictions. When the evidence against a certain defendant is weak, the prosecution is usually willing to offer him a lower sentence in plea-bargaining in order to ensure his conviction. Such a defendant would not accept an offer to plead guilty unless he receives a substantial concession in the agreement. Thus lenient plea-bargaining can indicate that the evidence against the defendant is weak. Given that weak evidence can indicate a higher probability of factual innocence, it is likely that the percentage of innocent defendants is relatively higher among defendants that are offered an exceptionally lenient plea-bargains. When courts prevent these types of agreements, they force the prosecutor either to go to trial or to dismiss the case. At the same time, the court would accept plea-bargains in strong cases because in these cases, prosecutors can achieve defendants' agreements to settle even without offering them exceedingly lenient concessions. By hindering the prosecutor's ability to agree to exceedingly lenient sentences, courts increase the cost of handling weak cases, without obstructing the prosecutor's ability to settle stronger cases. This helps to reduce the risk of wrongful convictions by encouraging the prosecutor to pursue the cases of defendants that are more likely to be guilty and to dismiss the cases against defendants that more likely to be innocent.

Oren Gazal and Oren Bar-Gill, "Plea Bargains Only for the Guilty" (November 1, 2004). University of Michigan Legal Working Paper Series. University of Michigan John M. Olin Center for Law & Economics Working Paper Series. Working Paper 30.

ABSTRACT:

A major concern with plea bargains is that innocent defendants will be induced to plead guilty. This paper argues that the law can address this concern by providing prosecutors with incentives to select cases in which the probability of guilt is high. By restricting the permissible sentence reduction in a plea bargain the law can preclude plea bargains in cases where the probability of conviction is low (L cases). The prosecutor will therefore be forced to (1) select fewer L cases and proceed to trial with these cases; or (2) select more cases with a higher probability of conviction (H cases) that can be concluded via a less-costly plea bargain. As long as the probability of conviction is positively correlated with the probability of guilt, this selection-of-cases effect implies a reduced number of innocent defendants that accept plea bargains. We argue that the Federal Sentencing Guidelines in fact achieve, albeit inadvertently, this socially desirable selection effect. We further argue that more limited discretion in sentencing facilitates the selection-of-cases effect. In this respect, the Federal Guidelines are superior to some of the state-level guidelines that leave considerable room for discretion in sentencing.

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