BEYOND FIRESIDE INDUCTIONS
Paul Meehl observed some time ago that many legal doctrines depend less for their origins on systematic empirical research than on the lawyer’s “fireside inductions,” or “commonsense empirical generalizations about human behavior which we accept on the culture’s authority plus introspection plus anecdotal evidence from ordinary life.” As any evidence professor can tell you, behind many of the rules of evidence lurks much armchair theorizing about human nature by eminent jurists and little careful study of human behavior.
JUDICIAL REVIEW AND NONGENERALIZABLE CASES
Neal Devins; Alan Meese
Recognizing that the “life of the law” is experience, not logic, legal academics are increasingly turning their attention to judicial bias and other limits on judicial factfinding. For Judge Richard Posner, “The first thing the courts have to learn is how little they know.” And for Cass Sunstein, “Far more progress might be made through an empirically informed constitutional law” than through a jurisprudence that is “indifferent” to factual questions.
THE FUTILITY OF APPEAL: DISCIPLINARY INSIGHTS INTO THE “AFFIRMANCE EFFECT” ON THE UNITED STATES COURTS OF APPEALS
Chris Guthrie; Tracey E. George
Imagine a federal case on appeal about which you know nothing—not the parties, not the issue in dispute, not the court ruling below, nothing. Suppose the case is being decided by the United States Supreme Court. If this is all you know about the case, what prediction would you make about its outcome? Now suppose, instead, that the case is being decided by a panel of circuit judges on the United States Courts of Appeals. You do not know the particular judges on the panel, nor do you even know the circuit where the case is being heard. If all you know about the case is that a three-judge panel in one of the circuits is hearing the case, what prediction would you make about its outcome?
JUDICIAL VALUATION BEHAVIOR: SOME EVIDENCE FROM BANKRUPTCY
This Article presents an empirical study of judicial valuation in the bankruptcy context, focusing on twenty-four valuation disputes in which a bankruptcy judge reached a valuation outcome between the values contended for by the parties. Two main findings emerged from the cases studied: (1) bankruptcy judges on average allocated 65.2% of the value in controversy to debtors and 34.8% to secured creditors; and (2) bankruptcy judges were more than three times as likely to allocate most of the value in controversy to debtors as they were to secured creditors. These results lend empirical support to the behaviorist intuition that loss aversion bias informs judicial decisionmaking and may have further implications for substantively neutral reform of the processes whereby valuation disputes are resolved.
EVOLUTION OF RULES IN A COMMON LAW SYSTEM: DIFFERENTIAL LITIGATION OF THE FEE TAIL AND OTHER PERPETUITIES
Jeffrey Evans Stake
In our common law system, courts have the power to make new law and to change old law. As Judge Posner might say, judges are not potted plants. They make law by deciding specific cases. For each case, there are at least two possible outcomes. In most cases, one of these outcomes will be more efficient than the other; that is to say, one outcome will generate greater total welfare in the future. After Posner argued that much of the common law could be explained in terms of efficiency, Paul Rubin set forth an evolutionary theory of how the common law, pushed by an invisible hand, might evolve to an efficient set of rules. His seminal idea was that disputes involving inefficient rules would settle less often than disputes involving efficient rules, with the result that litigation would more frequently overturn inefficient rules. George Priest extended Rubin’s thesis, arguing that inefficient rules should generate larger stakes and, hence, more frequent litigation. And the discussion has continued to this day.6 This Article presents a variation on the Rubin-Priest theme, offering the fee tail and similar restraints on alienation as examples of how inefficient rules can lead to inefficient uses of land, which cause owners to seek the help of courts in freeing their lands from the inefficient constraints. Unlike bad decisions in some tort cases, bad decisions in property cases may return to the courts for reconsideration. In other words, there is a feedback loop, a mechanism that returns the output of a system back to the system’s input, that provides courts with opportunities to overturn inefficient common law property rules.
EVOLUTIONARY THEORIES OF COMMON LAW EFFICIENCY: REASONS FOR (COGNITIVE) SKEPTICISM
Adam J. Hirsch
Professor Jeffrey Stake’s article on legal evolution raises important, even tantalizing, questions from the perspective of behavioral theories of law. Those theories have emphasized the intellectual frailties of human persons—frailties that cloud judgment and lead decisionmakers astray, sometimes in systematic ways. The extent to which persons nonetheless allocate optimally their scarce cognitive resources is a subject of ongoing debate today within the field of cognitive psychology. Be that as it may, the finding that decisions reflect the bounded rationality, rather than global rationality, of the persons who make them distinguishes cognitive psychology from economics and, by extension, behavioral analysis of law from conventional law and economics.
JURORS OF THE ABSURD? THE ROLE OF CONSEQUENTIALITY IN JURY SIMULATION RESEARCH
Brian H. Bornstein; Sean G. McCabe
There are a number of situations in which it is impractical, expensive, unethical, or methodologically deficient to study behavior in its natural context. Researchers are generally not allowed in the cockpit of an F-14 to study pilots’ decisionmaking, nor are they allowed to traumatize some participants (but not others) to determine whether highly stressful events might be repressed. The legal domain is no exception, as researchers are generally unable to assign decisionmakers (for example, judges and juries) to experimental conditions or observe their decisions as they naturally occur. Archival studies overcome some of these limitations, but they present their own set of problems, such as selective sampling and irremediably confounded variables. The major recourse, as in other arenas of behavioral science, is to conduct simulations. Analyses of the field of jury research suggest that experimental simulations have been increasing in recent years.
EVALUATING JURIES BY COMPARISON TO JUDGES: A BENCHMARK FOR JUDGING?
Jennifer K. Robbennolt
Juries have been widely criticized and widely studied. The popular view is that juries are pro-plaintiff decisionmaking bodies, easily swayed by sympathy, highly likely to find liability, and inclined to award high amounts in damages. A wealth of empirical research, however, calls those stereotypes into doubt. Reviews of empirical research examining jury decisionmaking, while finding particular areas in which juries encounter difficulty (for example, understanding legal instructions), attest to the overall competence of juries as decisionmakers.
COMPARING LEGAL FACTFINDERS: REAL AND MOCK, AMATEUR AND PROFESSIONAL
Robert J. MacCoun
The excellent articles by Brian Bornstein and Sean McCabe and Jennifer Robbennolt in this Symposium document the current state of two longstanding debates in jury scholarship—one on the external validity of mock jury experiments, the other on the relative factfinding ability of juries versus judges. Over a decade ago, I examined the state of evidence in each debate. With respect to what Bornstein and McCabe refer to as “consequentiality”—the question of whether decisions result in real outcomes—in 1989 I noted that “[e]xperiments comparing mock jurors with subjects who thought they were actually trying a case have been inconclusive; different studies have found mock jurors’ verdicts to be more lenient, less lenient, and no different from those of ‘actual’ jurors.” Bornstein and McCabe note with some frustration that there is no new evidence to clarify these results6—indeed, no studies have examined the issue since 1986. In stark contrast, Robbennolt shows that there has been considerable empirical progress on the second issue since 1993, when I was able to identify only two direct experimental comparisons of judge and juror judgmental performance.
ASKING THE RIGHT QUESTIONS ABOUT JUDGE AND JURY COMPETENCE
We should ask at least two questions when considering taking a task away from juries and giving it to judges on grounds that juries perform the task suboptimally: Is there good reason to believe that judges will perform the task better? What perverse effects may we introduce with this change in tasks? Despite the commonsense basis for these questions, surprisingly little research exists to answer either one. Fortunately, Jennifer Robbennolt’s contribution to this symposium issue provides a very helpful synthesis of the existing empirical research that compares the decisions of judges and juries, which leads to a tentative negative answer to the first question, and elsewhere Robbennolt partially answers the second question. Professor Robbennolt asks and answers the right questions about the allocation of duties between jury and judge, but we need much more research on judicial competence to correct the imbalance relative to the large amount of research on jury competence.
RULEMAKING VERSUS ADJUDICATION: A PSYCHOLOGICAL PERSPECTIVE
Jeffrey J. Rachlinski
Legal systems make law in one of two ways: by abstracting general principles from the decisions made in individual cases (through the adjudicative process) or by declaring general principles through a centralized authority that are to be applied in individual cases (through the rulemaking process). Administrative agencies have long had the unfettered authority to choose between the two methods. Although each method could identify the same solution to the legal issues that come before them, in practice, the two systems commonly settle upon different resolutions. Each system presents the underlying legal issue from a different cognitive perspective, highlighting and hiding different aspects of a legal problem. These differences produce different resolutions to legal problems. The single-case perspective of adjudication seems, in many ways, cognitively inferior to the broad perspectives that legislatures can incorporate into their decisionmaking processes. The adjudicative approach, however, has advantages that are less obvious. Notably, the adjudicative process is more likely to facilitate the adoption of simple, elegant rules for decisionmaking. The assessment of which approach is superior is, therefore, indeterminate. Each has its strengths and weaknesses that make it more or less appropriate for different contexts.
THE MICROFOUNDATIONS OF STANDARD FORM CONTRACTS: PRICE DISCRIMINATION VS. BEHAVIORAL BIAS
Standard form contracts appear to present a problem for the efficiency claims of those adhering to the positive law and economics school. Indeed, if we envision economic bargaining as movements within an Edgeworth box toward the Pareto set, one does not quite know what to do with standard form contracts. This disconnect between bargaining theory and empirical observation led some legal scholars to view form contracts as adhesion contracts, implying that they are the result of a powerful party thrusting its preferences on a helpless party. The take-it-or-leave-it nature of these contracts, which are generally drafted by the seller of a good or service, casts doubt on the usual assumption that market competition maximizes consumer surplus.
ORGANIZATIONAL MISCONDUCT: BEYOND THE PRINCIPAL-AGENT MODEL
Kimberly D. Krawiec
Recent high-profile events from the Columbia space shuttle disaster and Catholic Church sex scandal to the debacles at major U.S. corporations and financial institutions have caused a renewed interest in the subject of organizational misconduct. Yet we still know relatively little about this extremely important subject. For example, what induces large and important segments of an organization to engage in or ignore deviant behavior? What does and should our legal system do to deter such behavior? Are we currently doing enough?
Tiothy F. Malloy
In a smallish but pleasant office located in a nondescript, singlestory brick building on the north edge of RBS Industries’ chemical manufacturing plant, Kay Burde reviews specifications for changes to one of the plant’s production processes. Kay, a midlevel environmental manager for the firm, is particularly interested in the likely level of increased emissions and in why accountants in the plant’s corporate headquarters characterized those changes as capital expenditures. She is interested because these two factors, taken into account with several others, guide and constrain her judgment as to whether the changes will trigger additional regulatory obligations under the Clean Air Act and will ultimately require her to notify the Environmental Protection Agency (EPA) of the changes and the ensuing obligations.
TOO MUCH PAY, TOO MUCH DEFERENCE: BEHAVIORAL CORPORATE FINANCE, CEOS, AND CORPORATE GOVERNANCE
Troy A. Paredes
In this Article, Professor Paredes considers the implications of behavioral corporate finance, and of CEO overconfidence especially, for corporate governance. To date, corporate governance has focused on solving conflicts of interest and on motivating managers to work hard—in other words, on traditional agency problems. Corporate governance has not emphasized the need to remedy the kind of “good-faith mismanagement” that results when CEOs are overconfident, although well-intentioned and hard-working.
IN DEFENSE OF IMPERFECT COMPLIANCE PROGRAMS
In Organizational Misconduct: Beyond the Principal-Agent Model, Professor Krawiec argues that organizations have perverse incentives to implement ineffective compliance programs and supports this argument with a survey of empirical research. Based on her argument, she urges that organizations be held strictly liable for corporate crimes (in terms of both guilt and punishment), regardless of the implementation of a compliance program by the accused organization. Assuming arguendo that criminal law’s current treatment of compliance programs gives organizations an incentive to design inefficient programs, this Comment posits that corporate crime may be better deterred if criminal law embraces, rather than remains agnostic to, compliance programs.
POSSIBILITY AND PLAUSIBILITY IN LAW AND ECONOMICS
In attempting to provide policy advice to judges, legislators, administrators, and other legal actors, law and economics scholarship pays close attention to the incentive effects that legal rules have on the citizens subject to them. This consequentialist focus on the effects of law means that law and economics scholarship requires a descriptive account of how people do (or will) react to various possible legal regimes. Traditionally, scholars in the field have relied on rational choice theory (RCT) for this account, although there has always been diversity in the precise vision of rational behavior that researchers assume. Some researchers assume that actors will seek to maximize their wealth, while others assume only that actors will seek to maximize their broader self-interest. Still others make no assumptions about “ends,” assuming only that actors will maximize their subjective expected utility, however defined. Some researchers assume actors act on perfect information, while others assume that actors acquire information only to the point at which the marginal costs of acquisition exceed the marginal benefits. Despite the variations as to specifics, rationalist accounts of behavior are notable for assuming optimizing behavior on the part of actors.