Spring 2006 Workshops
Law and Economic Studies
January 23, 2006
Omri Ben-Shadar, University of Michigan Law School
Boilerplate and Economic Power in Auto Manufacturing Contracts
Authored with James J.White
Abstract - This article studies the standard form contracts used by automobile manufacturers to purchase auto parts. It explores how the contracts reflect divisions of bargaining power, asymmetric information, problems of hold-up and renegotiation, and market competition. Based on interviews with representatives of buyers and suppliers, the article also describes the process of drafting the forms, the negotiation over price and other terms in the shadow of these forms, and the opportunities for non-drafters to extract improved terms. Some of the main lessons are: (i) The terms of the contracts and the bidding process prevent ex-post hold-up by suppliers (in contrast to the claims made by Benjamin Klein and others based on the GM/Fisher Body contract); (ii) There is surprisingly little ad-hoc tailoring of terms, even when such tailoring can increase the surplus from the deal; (iii) Internal organization structures are harnessed effectively to secure favorable bargaining outcomes; (iv) There is a significant variation between the standard forms utilized by the big automakers, in some of the most important aspects of the deals. This variation suggests that some of the terms are inefficient.
Ben-Shahar, Omri - Spring 06 WS.pdf
February 6, 2006
Theodore Eisenberg, Cornell Law School
The Significant Association Between Punitive and Compensatory Damages in Blockbuster Cases:
A Methodological Primer
Authored with Martin T. Wells
Abstract - This article assesses the relation between punitive and compensatory damages in a dataset, gathered by Hersch and Viscusi(H-V), consisting of all known punitive damages awards in excess of $100 million from 1985 through 2003. It shows that a strong, statistically significant relation exists between punitive and compensatory awards, a relation that replicates similar findings in nearly all other analyses of punitive and compensatory damages. H-V's claim that no significant relation exists between punitive and compensatory awards in these data appears to be an artifact of questionable regression methodology.
Eisenberg, Theodore - Spring 06 WS.pdf
February 20, 2006
Michael Abramowicz, The George Washington University Law School
Abramowicz, Michael - Spring 06 WS.pdf
March 6, 2006
John P. Brown, National Economic Research Association
Are Four Big Auditing Firms Enough?
Abstract - The auditing of Corporate financial statements in the United States and the rest of the world is carried out almost entirely by four firms: Deloitte & Touche, PricewaterhouseCoopers, Ernst & Young, and KPMG. Indeed 99 percent of corporations, whether measured by sales or by assets are audited by the Big Four. In this paper I explore some of the issues that are raised by the concentration of the industry into four firms, and what, if anything, might or should be done about it.
Brown, John P. - Sp 06 WS.pdf
March 27, 2006
Oona Hathaway, Yale Law School
Hathaway, Oona A - Spring 06 WS.pdf
Hathaway, Oona A - Spring 06 WS - Background Reading.pdf
April 10, 2006
Michelle Mello, Harvard School of Public Health & Departmejt of Health Policy and Management
Is There a Business Case for Patient Safety?
An Analysis of Hospital Adverse Event Costs and Where They Fall
Abstract - Patient safety advocates argue that the high costs of medical errors and adverse events create a financial incentive for hospitals to invest in technologies and systems improvements that will reduce preventable medical injuries. However, if hospitals themselves do not actually incur much of these costs, their incentives for safety improvement may be inadequate. To determine the amounts that hospitals incur in medical-injury-related expenses and the amounts they externalize to other payers, we analyzed previously collected data on 465 adverse events derived from medical record reviews of 12,514 patients discharged from 24 acute care hospitals in Utah and Colorado hospitals. We calculated the total societal costs of adverse events and negligent adverse events, the injury-related costs absorbed by hospitals, and the costs that were externalized to other payers. On average, for every patient treated, the sampled hospitals generated injury-related total costs of $4,434 and negligent-injury-related costs of $3,811 in 1992 dollars. Total costs varied substantially across hospitals, from $40 to nearly $15,000 per admission. A very high proportion (91%) of the total costs of hospital adverse events was borne by parties other than the hospital. On average, hospitals externalized injury-related costs in the amount of $4,252 per admission ($3,673 per admission for negligent injuries). In order to give hospitals strong incentives for safety improvement, legal reforms or market or policy interventions may be required to address the problem of externalization of injury costs.
Mello, M - Sp 06 WS.pdf
April 24, 2006
Daniel M. Klerman, University of Southern California Law School
Jurisdictional Competition and the Evolution of the Common Law
Abstract - This paper explores the role jurisdictional competition played in the development of the common law. For most of English legal history, there were several courts with overlapping jurisdiction. In addition, judges received fees on a per case basis. As a result, judges had an incentive to hear more cases. The central argument of this article is that, since plaintiffs chose the forum, judges and their courts competed by making the law more favorable to plaintiffs. Courts expanded their jurisdictions to give plaintiffs more choices, made their procedures cheaper, swifter and more effective, and developed legal doctrines which made it difficult for defendants to prevail. Of course, jurisdictional competition was not without constraints, most importantly Parliament and Chancery. This paper tries to show how important features of the comnmon law, including the structure of contract law, can be explained as the result of competition among courts and the constraints on that competition.
Starting in 1799, statutes took fees away from the judges. The hypothesis that competition induced a pro-plaintiff bias is tested by quantitative analysis of judicial decisionmaking before and after those statutes.
Klerman. Daniel - Sp 06 WS.pdf