Showing 9 of 10 Publications by Michael Abramowicz

Will AI Make Law Productive?

Popular Media This is my third and final installment summarizing the arguments in my draft article The Cost of Justice at the Dawn of AI. In the first, I . . .

This is my third and final installment summarizing the arguments in my draft article The Cost of Justice at the Dawn of AI. In the first, I reviewed Baumol’s cost disease’s implications for the legal sector. Baumol recognized that if the productivity of any sector improved less than the productivity of the economy as a whole, the goods or services from that sector would become more expensive. In the second, I assessed whether the legal sector has stagnated in this way. This turns out to be difficult or impossible to measure conclusively, because it’s hard to assess whether legal work is improving in quality. But crude measures like consumer price indices suggest stagnation. Rapidly decreasing trial rates provide further evidence. It should not be surprising that fewer cases, civil and criminal, make it to trial if legal process is getting more expensive.

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Innovation & the New Economy

Has Law Become Stagnant?

Popular Media My last post provided an overview of my draft article The Cost of Justice at the Dawn of AI and explained the basic logic of Baumol’s cost disease for . . .

My last post provided an overview of my draft article The Cost of Justice at the Dawn of AI and explained the basic logic of Baumol’s cost disease for the practice of law. Just as in any other market, if the productivity of lawyers increases at a slower rate than the rest of the economy, legal services will become more expensive. And if a technology like artificial intelligence leads legal productivity to increase at a faster rate than the rest of the economy, then legal services will become cheaper.

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Innovation & the New Economy

Legal Productivity, the Cost Disease, and AI

Popular Media It has been a while since my last post on the Volokh Conspiracy. In 2021, I became associate dean at George Washington and did not . . .

It has been a while since my last post on the Volokh Conspiracy. In 2021, I became associate dean at George Washington and did not have time to write. Last year, I switched associate dean roles and my portfolio became smaller, so I was fortunate to have some time to return to scholarship and to complete several articles. I’ll begin my return to blogging by writing a series of posts offering shorter versions of the key arguments in a recently completed article that I have now submitted to law reviews, entitled The Cost of Justice at the Dawn of AI.

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Innovation & the New Economy

Regulating Producers by Randomizing Consumers

Scholarship Abstract Consumer law aims to empower consumers with accurate information and to protect them from misinformation. For complex goods and services, however, mandated disclosure laws . . .

Abstract

Consumer law aims to empower consumers with accurate information and to protect them from misinformation. For complex goods and services, however, mandated disclosure laws and other consumer law tools have had only limited success in helping consumers project their satisfaction and costs. Market responses, such as ratings, have limitations that have prevented them from compensating adequately for consumer law’s shortcomings. This Article describes how regulators could improve measurements of quality and cost by borrowing a tool from drug law: randomization. In designated markets, consumers who accept an incentive to volunteer would be randomized among two or more choices, and the government would collect short- and long-term information about each consumer’s experience. For example, in the health insurance market, by providing discounts to consumers who select two or more possible insurers, the government could accomplish the goal of comparing insurers’ health outcomes, free from the current confounding concern that different health insurers serve different pools of insureds. Randomization similarly could help overcome informational problems and abusive conduct in highly regulated markets for health providers, educational institutions, and lawyers, as well as for more ordinary goods and services, such as automobile repair. The information generated through randomization not only could be of direct use to consumers, but also could serve as an input into additional regulation, allowing the government to make more informed decisions about mandating product features where data establishes that producers exploit systematic errors by consumers.

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Financial Regulation & Corporate Governance

Modeling Fee Shifting with Computational Game Theory

Scholarship Abstract While modern mathematical models of settlement bargaining in litigation generally seek to identify perfect Bayesian Nash equilibria, previous computational models have lacked game theoretic . . .

Abstract

While modern mathematical models of settlement bargaining in litigation generally seek to identify perfect Bayesian Nash equilibria, previous computational models have lacked game theoretic foundations. This article illustrates how computational game theory can complement analytical models. It identifies equilibria by applying linear programming techniques to a discretized version of a cutting-edge model of settlement bargaining. This approach makes it straightforward to alter some assumptions in the model, including that the evidence about which the parties receive signals is irrelevant to the merits and that the party with a stronger case on the merits also has better information. The computational model can also toggle easily to explore cases involving liability rather than damages and can incorporate risk aversion. A drawback of the computational model is that bargaining games may have many equilibria, complicating assessments of whether changes in equilibria associated with parameter variations are causal.

Read at SSRN.

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Innovation & the New Economy

The Cost of Justice at the Dawn of AI

Scholarship Abstract Justice isn’t free, but it might soon get much less expensive. Policies concerning issues such as arbitration, class actions, and plea bargaining depend on . . .

Abstract

Justice isn’t free, but it might soon get much less expensive. Policies concerning issues such as arbitration, class actions, and plea bargaining depend on how much legal services cost, but the legal literature has generally ignored past and future cost trends and their implications. The result is a legal system that may change dramatically because of economic forces without active consideration of potential responses. Part of the reason for the lack of attention is that changes in legal productivity can be difficult to measure or forecast. Some commentators have concluded that the legal sector has become more expensive in recent decades, but they have missed both evidence that advances their case and arguments against it. The advent of AI introduces the possibility that lawyers’ productivity will improve, reducing legal costs and ameliorating concerns about access to justice. The legal system can best prepare by more explicitly recognizing how procedure and doctrine depend on cost, thus smoothing the path for a possible productivity revolution rather than relying entirely on the political system to respond. For example, courts could explicitly incorporate a cost-benefit framework that already is implicit in much summary judgment case law, potentially enabling more cases to be tried to verdict if legal services become cheaper. Similarly, greater honesty that the criminal justice system ratchets up penalties to encourage plea-bargaining might help avoid an outcome in which cost efficiencies allow prosecutors to exact longer prison sentences than legislatures intended.

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Innovation & the New Economy

Toward Livelihood Insurance

Scholarship Abstract Had Nobel Laureate Robert Shiller’s proposal for livelihood insurance been implemented, economic adjustment to the coronavirus pandemic would have been much smoother. Individuals hit . . .

Abstract

Had Nobel Laureate Robert Shiller’s proposal for livelihood insurance been implemented, economic adjustment to the coronavirus pandemic would have been much smoother. Individuals hit especially hard economically, such as restaurant workers and small business owners, would have received payments based on the collective circumstances of those similarly situated. Because no such market existed, the government acted instead as social insurer. Unable to measure loss accurately, the government distributed payments to all taxpayers, providing fiscal stimulus but not effectively focusing relief on those suffering the most. This Article considers how the government might facilitate creation of robust markets in livelihood insurance. Such markets might smooth adjustment not only to pandemics, but also technological changes and unexpectedly weak economic performance in specific economic sectors, regions, or nations. Obstacles to creation of such insurance include limited ability of consumers to assess the benefits of this financial product and inability of businesses to obtain intellectual property protection. Short of creating a regime of mandatory insurance, which might easily be evaded, the government can facilitate such markets by collecting and distributing information, serving as a market maker, or temporarily subsidizing purchases.

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Financial Regulation & Corporate Governance

Michael Abramowicz on Livelihood Insurance

Presentations & Interviews Michael Abramowicz of George Washington Law School discusses livelihood insurance in the first webinar of the New Ideas in Insurance speakers series of the Insurance . . .

Michael Abramowicz of George Washington Law School discusses livelihood insurance in the first webinar of the New Ideas in Insurance speakers series of the Insurance Law Center at the University of Connecticut School of Law. Nobel Laureate Robert Shiller has argued for livelihood insurance, a financial derivative that would provide compensation when many individuals in a particular occupation suffer losses. In this talk, Abramowicz explores why livelihood insurance did not emerge in time to protect workers in the last pandemic and what the government can do before the next crisis to protect workers in vulnerable professions. The full video is embedded below.

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Financial Regulation & Corporate Governance

Prediction Markets vs. Conventional Wisdom

Popular Media I promised to start by addressing some common criticisms of prediction markets. What better way to start than by attacking my friend, GW colleague, and . . .

I promised to start by addressing some common criticisms of prediction markets. What better way to start than by attacking my friend, GW colleague, and now co-conspirator Orin Kerr? Orin has at least twice (in 2005, and earlier this month) endorsed the criticism that the election markets don’t seem to do much more than track the conventional wisdom. Orin is in good if unfamiliar company; Paul Krugman recently made a similar criticism.

Read the full piece here.

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Financial Regulation & Corporate Governance