When we are sick or in pain, we need relief. We know available prescription drugs won’t always be perfect. They sometimes have side effects. But we are grateful for even imperfect relief as an alternative to perfect pain.

Pharmaceutical companies aim to identify good drugs and get them to market, while constantly returning to the lab to innovate and make them even better, working to get the next version closer to perfect and with fewer side effects. But, thanks to a recent decision by a California appellate court, the incentives to develop new drugs and innovate to find even better alternatives may be over. California may have permanently impeded all pharmaceutical innovation by holding that a drug company can be sued for bringing two safe drugs to market, but not discovering the better one first. If a new court decision holds, these companies can be punished unless they bring no drug until they find the perfect drug.

Read the full piece here.

The thesis of this essay is that policymakers must consider what the nature of social media companies as multisided platforms means for regulation. The balance struck by social media companies acting in response to the incentives they face in the market could be upset by regulation that favors the interests of some users over others. Promoting the use of technological and practical means to avoid perceived harms by users themselves would preserve the benefits of social media to society without the difficult tradeoffs of regulation. Part I will introduce the economics of multisided platforms like social media, and how this affects the incentives of these platforms. Social-media platforms, acting within the market process, are best usually best positioned to balance the interests of their users, but there could be occasions where the market process fails due to negative externalities. Part II will consider these situations where there are negative externalities due to social media and introduce the least-cost avoider principle. Usually, social-media users are the least-cost avoiders of harms, but sometimes social media are better placed to monitor and control harms. This involves a balance, as the threat of collateral censorship or otherwise reducing opportunities to speak and receive speech could result from social media regulation. Part III will then apply the insights from Part I and II to the areas of privacy, children’s online safety, and speech regulation.

I. Introduction

Policymakers at both the state and federal levels have been actively engaged in recent years with proposals to regulate social media, whether the subject is privacy, children’s online safety, or concerns about censorship, misinformation, and hate speech.^[1] While there may not be consensus about precisely why social media is bad, there is broad agreement that the major online platforms are to blame for at least some harms to society. It is also generally recognized, though often not emphasized, that social media brings great value to its users. In other words, there are costs and benefits, and policymakers should be cautious when introducing new laws that would upset the balance that social-media companies must strike in order to serve their users well.

This essay will propose a general approach, informed by the law & economics tradition, to assess when and how social media should be regulated. Part I will introduce the economics of multisided platforms, and how they affects social-media platforms’ incentives. The platforms themselves, acting within the market process, are best usually best-positioned to balance the interests of their users, but there could be occasions where the market process fails due to negative externalities. Part II will consider such externalities and introduce the least-cost avoider principle. Usually, social-media users are the least-cost avoiders of harms, but platforms themselves are sometimes better placed to monitor and control harms. This requires a balance, as social-media regulation raises the threat of collateral censorship or otherwise reducing opportunities to speak and receive speech. Part III will apply the insights from Part I and II to the areas of privacy, children’s online safety, and speech regulation.

The thesis of this essay is that policymakers must consider social-media companies’ status as multisided platforms means for regulation. The balance struck by social-media companies acting in response to the market incentives they face could be upset by regulation that favors the interests of some users over others. Promoting the use of technological and practical means to avoid perceived harms would allow users to preserve the benefits of social media without the difficult tradeoffs of regulation.

II. The Economics of Social-Media Platforms

Mutually beneficial trade is a fundamental bedrock of the market process. Entrepreneurs—including those that act through formal economic institutions like business corporations—seek to discover the best ways to serve consumers. Various types of entities help connect those who wish to buy products or services to those who are trying to sell them. Physical marketplaces are common around the world: those places set up to facilitate interactions between buyers and sellers. If those marketplaces fail to serve the interests of those who use them, others will likely arise.

Social-media companies are a virtual example of what economists call multi-sided markets or platforms.^[2] Such platforms derive their name from the face that they serve at least two different types of customers and facilitate their interaction. Multi-sided platforms have “indirect network effects,” described by one economist as a situation where “participants on one side value being able to interact with participants on the other side… lead[ing] to interdependent demand.”^[3] In some situations, a platform may determine it can only raise revenue from one side of the platform if demand on the other side of the platform is high. In such cases, the platform may choose to offer one side free access to the platform to boost such demand, which is subsidized by participants on the other side of the platform.^[4] This creates a positive feedback loop in which more participants on one side of the platform leads to more participants on the other.

In this sense, social-media companies are much like newspapers or television in that, by solving a transaction cost problem,^[5] these platforms bring together potential buyers and sellers by providing content to one side and access to consumers on the other side. Recognizing that their value lies in reaching users, these platforms sell advertising and offer access to content for a lower price, often at the price of zero (or free). In other words, advertisers subsidize the access to content for platform users.

Therefore, most social-media companies are free for users. Revenue is primarily collected from the other side of the platform—i.e., from advertisers. In effect, social-media companies are attention platforms: They supply content to users, while collecting data for targeted advertisements for businesses who seek access to those users. To be successful, social-media companies must keep enough (and the right type of) users engaged so as to maintain demand for advertising. Social-media companies must curate content that users desire in order to persuade them to spend time on the platform.

But unlike newspapers or television, social-media companies primarily rely on their users to produce content rather than creating their own. Thus, they must also consider how to attract and maintain high-demand content creators, as well as how to match user-generated content to the diverse interests of other users. If they fail to serve the interests of high-demand content creators, those users may leave the platform, thus reducing time spent on the platform by all users, which thereby reduces the value of advertising. Similarly, if they fail to match content to user interests, those users will be less engaged on the platform, reducing its value to advertisers.

Moreover, this means that social-media companies need to balance the interests of advertisers and other users. Advertisers may desire more data to be collected for targeting, but users may desire less data collection. Similarly, advertisers may desire more ads, while users may prefer fewer ads. Advertisers may prefer content that keeps users engaged on the platform, even if it is harmful for society, whether because it is false, hateful, or leads to mental-health issues for minors. On the other hand, brand-conscious advertisers may not want to run ads next to content with which they disagree. Moreover, users may not want to see certain content. Social-media companies need to strike a balance that optimizes their value, recognizing that losing participants on either side would harm the other.

Usually, social-media companies acting within the market process are going to be best-positioned to make decisions on behalf of their users. Thus, they may create community rules that restrict content that would, on net, reduce user engagement.^[6] This could include limitations on hate speech and misinformation. On the other hand, if they go too far in restricting content that users consider desirable, that could reduce user engagement and thus value to advertisers. Social-media companies therefore compete on moderation policies, trying to strike the appropriate balance to optimize platform value. A similar principle applies when it comes to privacy policies and protections for minors: social-media companies may choose to compete by providing tools to help users avoid what they perceive as harms, while keeping users on the platform and maintaining value for advertisers.

There may, however, be scenarios where social media produces negative externalities^[7] that are harmful to society. A market failure could result, for instance, if platforms have too great of an incentive to allow misinformation or hate speech that keeps users engaged, or to collect too much (or the wrong types of) information for targeted advertising, or to offer up content that is harmful for minors and keeps them hooked to using the platform.

In sum, social-media companies are multi-sided platforms that facilitate interactions between advertisers and users by curating user-generated content that drives attention to their platforms. To optimize the platform’s value, a social-media company must keep users engaged. This will often include privacy policies, content-moderation standards, and special protections for minors. On the other hand, incentives could become misaligned and lead to situations where social-media usage leads to negative externalities due to insufficient protection of privacy, too much hate speech or misinformation, or harms to minors.

III. Negative Social-Media Externalities and the Least-Cost-Avoider Principle

In situations where there are negative externalities from social-media usage, there may be a case for regulation. Any case for regulation must, however, recognize the presence of transaction costs, and consider how platforms and users may respond to changes in those costs. To get regulation right, the burden of avoiding a negative externality should fall on the least-cost avoider.

The Coase Theorem, derived from the work of Nobel-winning economist Ronald Coase^[8] and elaborated on in the subsequent literature,^[9] helps to explain the issue at hand:

1. The problem of externalities is bilateral;
2. In the absence of transaction costs, resources will be allocated efficiently, as the parties bargain to solve the externality problem;
3. In the presence of transaction costs, the initial allocation of rights does matter; and
4. In such cases, the burden of avoiding the externality’s harm should be placed on the least-cost avoider, while taking into consideration the total social costs of the institutional framework.

In one of Coase’s examples, the noise from a confectioner using his machinery is a potential cost to the doctor next door, who consequently can’t use his office to conduct certain testing. Simultaneously, the doctor moving his office next door is a potential cost to the confectioner’s ability to use his equipment. In a world of well-defined property rights and low transaction costs, the initial allocation of a right would not matter, because the parties could bargain to overcome the harm in a beneficial manner—i.e., the confectioner could pay the doctor for lost income or to set up sound-proof walls, or the doctor could pay the confectioner to reduce the sound of his machines.^[10] But since there are transaction costs that prevent this sort of bargain, it is important whether the initial right is allocated to the doctor or the confectioner. To maximize societal welfare, the cost should be placed on the entity that can avoid the harm at the lowest cost.^[11]

Here, social-media companies create incredible value for their users, but they also arguably impose negative externalities in the form of privacy harms, misinformation and hate speech, and harms particular to minors. In the absence of transaction costs, the parties could simply bargain away the harms associated with social-media usage. But since there are transaction costs, it matters whether the burden to avoid harms is placed on the users or the social-media companies. If the burden is wrongly placed, it may end up that the societal benefits of social media will be lost.

For instance, imposing liability on social-media companies risks collateral censorship, which occurs when platforms decide that liability risk is too large and opt to over-moderate or not host user-generated content, or to restrict access to such content either by charging higher prices or excluding those who could be harmed (like minors).^[12] By wrongly placing the burden to avoid harms on social-media platforms, societal welfare will be reduced.

On the other hand, there may be situations where social-media companies are the least-cost avoiders. For instance, they may be best-placed to monitor and control harms associated with social-media usage when it is difficult or impossible to hold those using their platforms accountable for harms they cause.^[13] For instance, if a social-media company allows anonymous or pseudonymous use, with no realistic possibility of tracking down users who cause harms, illegal conduct could go undeterred. In such cases, placing the burden on social-media users could lead to social media imposing uncompensated harms on society.

Thus, it is important to determine whether the social-media companies or their users are the least-cost avoiders. Placing the burden on the wrong party or parties would harm societal welfare, either by reducing the value of social media or by creating more uncompensated negative externalities.

IV. Applying the Lessons of Law & Economics to Social-Media Regulation

Below, I will examine the areas of privacy, children’s online safety, and content moderation, and consider both the social-media companies’ incentives and whether the platforms or their users are the least-cost avoiders.

A. Privacy

As discussed above, social-media companies are multi-sided platforms that provide content to attract attention from users, while selling information collected from those users for targeted advertising. This leads to the possibility that social-media companies will collect too much information in order to increase revenue from targeted advertising. In other words, as the argument goes, the interests of the paying side of the platform will outweigh the interests of social-media users, thereby imposing a negative externality on them.

Of course, this assumes that the collection and use of information for targeted advertisements is considered a negative externality by social-media users. While this may be true for some, for others, it may be something they care little about or even value, because targeted advertisements are more relevant to them. Moreover, many consumers appear to prefer free content with advertising to paying a subscription fee.^[14]

It does seem likely, however, that negative externalities are more likely to arise when users don’t know what data is being collected or how it is being used. Moreover, it is a clear harm if social-media companies misrepresent what they are collecting and how they are using it. Thus, it is generally unobjectionable—at least, in theory—for the Federal Trade Commission or another enforcer to hold social-media companies accountable for their privacy policies.^[15]

On the other hand, privacy regulation that requires specific disclosures or verifiable consent before collecting or using data would increase the cost of targeted advertising, thus reducing its value to advertisers, and thereby further reducing the platform’s incentives of to curate valuable content for users. For instance, in response to the FTC’s consent agreement with YouTube charging that it violated the Children’s Online Privacy Protection Act (COPPA), YouTube required channel owners producing children’s content to designate their channels as such, along with automated processes designed to identify the same.^[16] This reduced content creators’ ability to benefit from targeted advertising if their content was directed to children. The result was less content created for children with poorer matching as well:

Consistent with a loss in personalized ad revenue, we find that child-directed content creators produce 13% less content and pivot towards producing non-child-directed content. On the demand side, views of child-directed channels fall by 22%. Consistent with the platform’s degraded capacity to match viewers to content, we find that content creation and content views become more concentrated among top child-directed YouTube channels.

Alternatively, a social-media company could raise the price it charges to users, as it can no longer use advertising revenue to subsidize users’ access. This is, in fact, exactly what has happened in Europe, as Meta now offers an ad-free version of Facebook and Instagram for $14 a month.^[18]

In other words, placing the burden on social-media companies to avoid the perceived harms from the collection and use of information for targeted advertising could lead to less free content available to consumers. This is a significant tradeoff, and not one that most social-media consumers appear willing to make voluntarily.

On the other hand, it appears that social-media users could avoid much of the harm from the collection and use of their data by using available tools, including those provided by social-media companies. For instance, most of the major social-media companies offer two-factor authentication, privacy-checkup tools, the ability to browse the service privately, to limit audience, and to download and delete data.^[19] Social-media users could also use virtual private networks (VPNs) to protect their data privacy while online.^[20] Finally, users could just not post private information or could limit interactions with businesses (through likes or clicks on ads) if they want to reduce the amount of information used for targeted advertising.

B. Children’s Online Safety

Some have argued that social-media companies impose negative externalities on minors by serving them addictive content and/or content that results in mental-health harms.^[21] They argue that social-media companies benefit from these harms because they are able to then sell data from minors to advertisers.

While it is true that social-media companies want to attract users through engaging content and interfaces, and that they make money through targeted advertising, it is highly unlikely that they are making much money from minors themselves. Very few social-media users under 18 have considerable disposable income or access to payment-card options that would make them valuable to advertisers. Thus, regulations that raise the costa to social-media companies of serving minors, whether through a regulatory duty of care^[22] or through age verification and verifiable parental consent,^[23] could lead social-media companies to invest more excluding minors than in creating vibrant and safe online spaces for them.

Federal courts considering age-verification laws have noted there are costs to companies, as well as users, in obtaining this information. In Free Speech Coalition Inc. v. Colmenero,^[24] the U.S. District Court in Austin, Texas, considered a law that required age verification before viewing online pornography, and found that the costs of obtaining age verification were high, citing the complaint that stated “several commercial verification services, showing that they cost, at minimum, $40,000.00 per 100,000 verifications.”^[25] But just as importantly, the transaction costs in this example also include the subjective costs borne by those who actually go through with verifying their age to access pornography. As the court noted, “the law interferes with the Adult Video Companies’ ability to conduct business, and risks deterring adults from visiting the websites.”^[26] Similarly, in NetChoice v. Griffin,^[27] the U.S. District Court for Western District of Arkansas found that a challenged law’s age-verification requirements were “costly” and would put social-media companies covered by the law in the position of needing to take drastic action to either implement age verification, restrict access for Arkansans, or face the possibility of civil and criminal enforcement.^[28]

On the other hand, social-media companies—responding to demand from minor users and their parents—have also exerted considerable effort to reduce harmful content being introduced to minors. For instance, they have invested in content-moderation policies and their enforcement, including through algorithms, automated tools, and human review, to remove, restrict, or add warnings to content inappropriate for minors.^[29] On top of that, social-media companies offer tools to help minors and their parents avoid many of the harms associated with social-media usage.^[30] There are also options available at the ISP, router, device, and browser level to protect minors while online. As the court put it in Griffin, “parents may rightly decide to regulate their children’s use of social media—including restricting the amount of time they spend on it, the content they may access, or even those they chat with. And many tools exist to help parents with this.”^[31]

In other words, parents and minors working together can use technological and practical means to make marginal decisions about social-media usage at a lower cost than a regulatory environment that would likely lead to social-media companies restricting use by minors altogether.^[32]

C. Content Moderation

There have been warring allegations about social-media companies’ incentives when it comes to content moderation. Some claim that salacious misinformation and hate speech drives user engagement, making platforms more profitable for advertisers; others argue that social-media companies engage in too much “censorship” by removing users and speech in a viewpoint-discriminatory way.^[33] The U.S. Supreme Court is currently reviewing laws from Florida and Texas that would force social-media companies to carry speech.^[34]

Both views fail to take into account that social-media companies are largely just responding to the incentives they face as multi-sided platforms. Social-media companies are solving a Coasean speech problem, wherein some users don’t want to be subject to certain speech from other users. As explained above, social-media companies must balance these interests by setting and enforcing community rules for speech. This may include rules against misinformation and hate speech. On the other hand, social-media companies can’t go too far in restricting high-demand speech, or they will risk losing users. Thus, they must strike a delicate balance.

Laws that restrict the “editorial discretion” of social-media companies may fail the First Amendment,^[35] but they also reduce the companies’ ability to give their customers a valuable product in light of user (and advertiser) demand. For instance, the changes in the moderation standards of X (formerly Twitter) in the last year since the purchase by Elon Musk have led to many users and advertisers exiting the platform due to a perceived increase in hate speech and misinformation.^[36]

Social-media companies need to be free to moderate as they see fit, free from government interference. Such interference includes not just the forced carriage of speech, but in government efforts to engage in censorship-by-proxy, as has been alleged in Murthy v. Missouri.^[37] From the perspective of the First Amendment, government intervention by coercing or significantly encouraging the removal of disfavored speech, even in the name of misinformation, is just as harmful as the forced carriage of speech.^[38] But more importantly for our purposes here, such government actions reduce platforms’ value by upsetting the balance that social-media companies strike with respect to their users’ speech interests.

Users can avoid being exposed to unwanted speech by averting their digital eyes from it—i.e., by refusing to interact with it and thereby training social-media companies’ algorithms to serve speech that they prefer. They can also take their business elsewhere by joining a social-media network with speech-moderation policies more to their liking. Voting with one’s digital feet (and eyes) is a much lower-cost alternative than either mandating the carriage of speech or censorship by government actors.

V. Conclusion

Social-media companies are multisided platforms that must curate compelling content while restricting harms to users in order to optimize their value to the advertisers that pay for access. This doesn’t mean they always get it right. But they are generally best-positioned to make those decisions, subject to the market process. Sometimes, there may be negative externalities that aren’t fully internalized. But as Coase taught us, that is only the beginning of the analysis. If social-media users can avoid harms at lower cost than social-media companies, then regulation should not place the burden on social-media companies. There are tradeoffs in social-media regulation, including the possibility that it will result in a less-valuable social-media experience for users.

[1] See e.g. Mary Clare Jalonick, Congress eyes new rules for tech, social media: What’s under consideration, Associated Press (May 8, 2023), https://www.wvtm13.com/article/whats-under-consideration-congress-eyes-new-rules-for-tech-social-media/43821405#;  Khara Boender, Jordan Rodell, & Alex Spyropoulos, The State of Affairs: What Happened in Tech Policy During 2023 State Legislative Sessions?, Project Disco (Jul. 25, 2023), https://www.project-disco.org/competition/the-state-of-affairs-statetech-policy-in-2023 (noting laws passed and proposed addressing consumer data privacy, content moderation, and children’s online safety at the state level).

[2] See e.g. Jean-Charles Rochet & Jean Tirole, Platform Competition in Two-Sided Markets, 1 J. Euro. Econ. Ass’n 990 (2003).

[3] David S. Evans, Multisided Platforms in Antitrust Practice, at 3 (Oct. 17, 2023), forthcoming, Michael Noel, Ed., Elgar Encyclopedia on the Economics of Competition and Regulation, available at https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4606511.

[4] For instance, many nightclubs hold “Ladies Night” where ladies get in free in order to attract more men who pay for entrance.

[5] Transaction costs are the additional costs borne in the process of buying or selling, separate and apart from the price of the good or service itself — i.e. the costs of all actions involved in an economic transaction. Where transaction costs are present and sufficiently large, they may prevent otherwise beneficial agreements from being concluded.

[6] See David S. Evans, Governing Bad Behavior by Users of Multi-Sided Platforms, 27 Berkeley Tech. L. J. 1201 (2012); Kate Klonick, The New Governors: The People, Rules, and Processes Governing Online Speech, 131 HARV. L. REV. 1598 (2018).

[7] An externality is a side effect of an activity that is not reflected in the cost of that activity — basically, what occurs when we do something whose consequences affect other people. A negative externality occurs when a third party does not like the effects of an action.

[8] See R.H. Coase, The Problem of Social Cost, 3 J. L. & Econ. 1 (1960)

[9] See Steven G. Medema, The Coase Theorem at Sixty, 58 J. Econ. Lit. 1045 (2020).

[10] See Coase, supra note 9, at 8-10.

[11] See id. at 34 (“When an economist is comparing alternative social arrangements, the proper procedure is to compare the total social product yielded by these different arrangements.”).

[12] See Felix T. Wu, Collateral Censorship and the Limits of Intermediary Liability, 87 Notre Dame L. Rev. 293, 295-96 (2011); Geoffrey A. Manne, Ben Sperry & Kristian Stout, Who Moderates the Moderators: A Law & Economics Approach to Holding Online Platforms Accountable Without Destroying the Internet, 49 Rutgers Computer & Tech. L J. 26, 39 (2022); Ben Sperry, The Law & Economics of Children’s Online Safety: The First Amendment and Online Intermediary Liability, Truth on the Market (May 12 2023), https://truthonthemarket.com/2023/05/12/the-law-economics-of-childrens-online-safety-the-firstamendment-and-online-intermediary-liability.

[13] See Geoffrey A. Manne, Kristian Stout & Ben Sperry, Twitter v. Taamneh and the Law & Economics of Intermediary Liability, Truth on the Market (Mar. 8, 2023), https://truthonthemarket.com/2023/03/08/twitter-v-taamneh-and-the-law-economics-of-intermediary-liability; Ben Sperry, Right to Anonymous Speech, Part 2: A Law & Economics Approach, Truth on the Market (Sep. 6, 2023), https://truthonthemarket.com/2023/09/06/right-to-anonymous-speech-part-2-a-law-economics-approach.

[14] See, e.g., Matt Kaplan, What Do U.S. consumers Think About Mobile Advertising?, InMobi (Dec. 15, 2021), https://www.inmobi.com/blog/what-us-consumers-think-about-mobile-advertising (55% of consumers agree or strongly agree that they prefer mobile apps with ads rather than paying to download apps); John Glenday, 65% of US TV viewers will tolerate ads for free content, according to report, The Drum (Apr. 22, 2022), https://www.thedrum.com/news/2022/04/22/65-us-tv-viewers-will-tolerate-ads-free-content-according-report (noting that a report from TiVO found 65% of consumers prefer free TV with ads to paying without ads). Consumers often prefer lower subscription fees with ads to higher subscription fees without ads as well. See e.g. Toni Fitzgerald, Netflix Gets it Right: Study Confirms People Prefer Paying Less With Ads, Forbes (Apr. 25, 2023), https://www.forbes.com/sites/tonifitzgerald/2023/04/25/netflix-gets-it-right-study-confirms-more-people-prefer-paying-less-with-ads/.

[15] See 15 U.S.C. § 45.

[16] See Garrett A. Johnson, Tesary Lin, James C. Cooper, & Liang Zhong, COPPAcalypse? The YouTube Settlement’s Impact on Kids Content, at 6-7, SSRN (Apr. 26, 2023), https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4430334.

[17] Id. at 1.

[18] See Sam Schechner, Meta Plans to Charge $14 a Month for Ad-Free Instagram or Facebook, Wall Street J. (Oct. 3, 2023), https://www.wsj.com/tech/meta-floats-charging-14-a-month-for-ad-free-instagram-or-facebook-5dbaf4d5.

[19] See Christopher Lin, Tools to Protect Your Privacy on Social Media, NetChoice (Nov. 16, 2023), https://netchoice.org/tools-to-protect-your-privacy-on-social-media/.

[20] See e.g. Chris Stobing, The Best VPN Services for 2024, PC Mag (Jan. 4, 2024), https://www.pcmag.com/picks/the-best-vpn-services.

[21] See e.g. Jonatahan Stempel, Diane Bartz & Nate Raymond, Meta’s Instagram linked to depression, anxiety, insomnia in kids – US state’s lawsuit, Reuters (Oct. 25, 2023), https://www.reuters.com/legal/dozens-us-states-sue-meta-platforms-harming-mental-health-young-people-2023-10-24/ (describing complaint from 33 states alleging Meta “knowingly induced young children and teenagers into addictive and compulsive social media use”).

[22] See e.g. California Age-Appropriate Design Code Act, AB 2273 (2022), https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202120220AB2273AADC; Kids Online Safety Act, S. 1409, 118th Cong. (2023), as amended and posted by the Senate Committee on Commerce, Science, and Transportation on July 27, 2023, available at  https://www.congress.gov/bill/118th-congress/senate-bill/1409 (last accessed Dec. 19, 2023).

[23] See e.g. Arkansas Act 689 of 2023, the “Social Media Safety Act.”

[24] Free Speech Coal. Inc. v. Colmenero, No. 1:23-CV-917-DAE, 2023 U.S. Dist. LEXIS 154065 (W.D. Tex., Aug. 31, 2023), available at https://storage.courtlistener.com/recap/gov.uscourts.txwd.1172751222/gov.uscourts.txwd.1172751222.36.0.pdf.

[25] Id. at 10.

[26] Id.

[27] NetChoice LLC. v. Griffin, Case No. 5:23-CV-05105 (W.D. Ark., Aug. 31, 2023), available at https://netchoice.org/wpcontent/uploads/2023/08/GRIFFIN-NETCHOICE-GRANTED.pdf.

[28] See id. at 23.

[29] See id. at 18-19.

[30] See id. at 19-20.

[31] Id. at 15.

[32] For more, see Ben Sperry, A Coasean Analysis of Online Age-Verification and Parental-Consent Regimes, at 23 (ICLE Issue Brief, Nov. 9, 2023), https://laweconcenter.org/wp-content/uploads/2023/11/Issue-Brief-Transaction-Costs-of-Protecting-Children-Under-the-First-Amendment-.pdf.

[33] For an example of a hearing where Congressional Democrats argue the former and Congressional Republicans argue the latter, see Preserving Free Speech and Reining in Big Tech Censorship, Libr. of Cong. (Mar. 28, 2023), https://www.congress.gov/event/118th-congress/house-event/115561.

[34] See Moody v. NetChoice, No. 22-555 (challenging Florida’s SB 7072); NetChoice v. Paxton, No. 22-277 (challenging Texas’s HB 20).

[35] See e.g. Brief of International Center for Law & Economics as Amicus Curiae in Favor of Petitioners in 22-555 and Respondents in 22-277, Moody v. NetChoice, NetChoice v. Paxton, In the Supreme Court of the United States (Dec. 7, 2023), available at https://www.supremecourt.gov/DocketPDF/22/22-277/292986/20231211144416746_Nos.%2022-277%20and%2022-555_Brief_corrected.pdf. .

[36] See e.g. Ryan Mac & Tiffany Hsu, Twitter’s U.S. Ad Sales Plunge 59% as Woes Continue, New York Times (Jun. 5, 2023), https://www.nytimes.com/2023/06/05/technology/twitter-ad-sales-musk.html (“Six ad agency executives who have worked with Twitter said their clients continued to limit spending on the platform. They cited confusion over Mr. Musk’s changes to the service, inconsistent support from Twitter and concerns about the persistent presence of misleading and toxic content on the platform.”); Kate Conger, Tiffany Hsu & Ryan Mac, Elon Musk’s Twitter Faces Exodus of Advertisers and Executives, New York Times (Nov. 1, 2022), https://www.nytimes.com/2022/11/01/technology/elon-musk-twitter-advertisers.html (“At the same time, advertisers — which provide about 90 percent of Twitter’s revenue — are increasingly grappling with Mr. Musk’s ownership of the platform. The billionaire, who is meeting advertising executives in New York this week, has spooked some advertisers because he has said he would loosen Twitter’s content rules, which could lead to a surge in misinformation and other toxic content.”).

[37] See Murthy v. Missouri, No.23A-243; see also Missouri v. Biden, No. 23-30445, slip op. (5th Cir. Sept. 8, 2023).

[38] See Ben Sperry, Knowledge and Decisions in the Information Age: The Law & Economics of Regulating Misinformation on Social Media Platforms, (ICLE White Paper Sept. 22, 2023), forthcoming 59 Gonz. L. Rev. (2023), available at https://laweconcenter.org/resources/knowledge-and-decisions-in-the-information-age-the-law-economics-of-regulating-misinformation-on-social-media-platforms/.

 

Should be block quote

George Orwell’s “Nineteen Eighty-Four” is frequently invoked when political actors use language to obfuscate what they are doing. Ambiguity in language can allow both sides to appeal to the same words, like “the First Amendment” or “freedom of speech.” In a sense, the arguments over online speech currently before the U.S. Supreme Court really amount to a debate about whether private actors can “censor” in the same sense as the government.

In the oral arguments in this week’s NetChoice cases, several questions from Justices Clarence Thomas and Samuel Alito suggested that they believed social-media companies engaged in “censorship,” conflating the right of private actors to set rules for their property with government oppression. This is an abuse of language, and completely inconsistent with Supreme Court precedent that differentiates between state and private action.

Read the full piece here.

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.

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.

Executive Summary

Vaccines for the SARS-CoV-2 virus saved countless lives and are a modern science miracle. But they had risks, were not as effective as originally claimed, and were effectively forced onto many people in order for them to work, attend school, or travel. There is early evidence that these and other factors may currently be contributing to heightened vaccine hesitancy, with potentially serious consequences for public health.

To better understand the extent and causes of vaccine hesitancy, we surveyed 124 physicians in Montgomery County, Pennsylvania. They reported that most patients (nearly all adults and most children and infants) took the initial COVID-19 vaccines in the winter of 2021. Take-up among adults declined over the proceeding months and was much lower by the second half of 2023 (and almost non-existent among infants). This shift in vaccine uptake was especially prevalent in the more staunchly Republican-voting areas of Montgomery County. It is noteworthy, however, that at-risk populations continue to receive vaccine boosters.

More worryingly, physicians also report an increase in patient distrust for non-COVID vaccines and a more generalized increase in concern about and distrust of public-health advice among their patients. Even some physicians are concerned about governmental public-health advice.

Future research will need to establish whether vaccine uptake has changed and, if so, how it has changed, and what this may mean for public health. If these data are replicated in larger surveys and a trend becomes identifiable, the implications for public health could be serious, indeed.

I. Background

Vaccines are among the most powerful interventions in the field of public health, plausibly saving and improving more lives than anything other than good sanitation and diet. Historically, however, vaccines have typically taken years to develop. When effective vaccines were developed for COVID within a year of the pandemic’s emergence, many were surprised and awed.[1] Amazingly and, in retrospect, incredibly, the makers of the first mRNA vaccines to be granted emergency use authorization by the U.S. Food and Drug Administration (FDA) claimed more than 90% efficacy in trials. This is much higher than the efficacy of vaccines for many other diseases,[2] including influenza, although this level of efficacy was expected to wane over time.[3] For all of these reasons, COVID vaccines were greeted as truly remarkable public-health interventions.

Uptake of COVID vaccines was initially very high.[4] This was likely primarily because of the protection they afforded against a potentially deadly disease. But it was also partly because, for many, vaccination became a requirement for work, travel, and most other social interactions.

But concerns about the vaccines soon arose. While many of these purported risks were plainly false,[5] some—most notably, the risk of myocarditis and pericarditis among the young—were supported by data.[6] It also emerged that the vaccines were far less effective and shorter lived than originally touted. Moreover, they do not completely prevent disease transmission, although they probably reduce transmission by reducing viral loads.[7] As the virus has mutated over time, it has generally become more virulent, but less dangerous, which also likely has informed the calculus of those considering whether to take further vaccine boosters.

Despite these concerns, state and federal authorities have recommended and, in many cases, demanded vaccination.[8] These mandates were applied even to those who had just had COVID. This appeared illogical, given that the natural immunity provided by a disease is usually greater than the passive immunity from vaccination. This appears to be true of COVID, as well.[9]

U.S. vaccine policy is comprehensive and promotes vaccinations for all ages.[10] It also continues to promote COVID vaccines for everyone over six months old.[11] But skeptics have claimed all sorts of dangers from the vaccines, and most people report their experiences are that the vaccines really only prevented death for the old, obese, or those with other co-morbidities. This has resulted in reactive vaccine hesitancy, especially in more Republican-leaning areas. We hypothesize that this is partly because many elected Republicans vocally opposed vaccine mandates and some even voted to prohibit private requirements.[12] Such actions likely influenced opinion in these Republican-voting areas.

A. Aims

The aim of this research is to examine vaccine uptake and patient opinions about vaccines in Montgomery County, Pennsylvania. If, as expected, COVID-vaccine refusal and more general vaccine hesitancy has increased over the past few years, reasons for this will be discussed.

B. Methods

Primary physicians oversee many vaccinations and also address many questions from patients about vaccines, including about efficacy and safety. We undertook a survey of primary physicians in order to obtain information about changes in vaccine uptake, physicians’ interpretations of patients’ opinions about vaccines, and their own opinions about vaccines.

The survey was undertaken in Montgomery County, Pennsylvania, which ranges from the Northeast suburbs of Philadelphia into more rural areas. It has three members of the U.S. House of Representatives, including two Democrats (Reps. Madeleine Dean and Mary Scanlon) and one Republican (Rep. Brian Fitzpatrick).

Physicians were surveyed in the three constituencies. To assess uptake of, and opinions about, vaccines across the political divide, it made sense to find the few Republican-voting areas and compare them to the rest. The two most strongly Republican-voting of the county’s14 Pennsylvania House of Representatives districts are District 147 and District 131, both of which have 30% more registered Republican voters than Democrats. In many of the other state House districts, there are more than twice as many Democrats as Republicans registered to vote. From within the overall sample, physicians from these two Republican-leaning districts were compared to the other 12 state House districts. The tables in the appendix show all relevant political data.

C. Survey

The survey, titled “Vaccine Questionnaire” and republished in full below, was kept short to ensure full participation by physicians. It was undertaken for two weeks starting in mid-January 2024, with responses collected online, over the phone, or in-person.

D. Vaccine Questionnaire

The aim of this short survey is to find out about opinions and uptake of key vaccines in your practice. And to note whether there have been changes in either opinions or uptake of vaccines over the past few years.

1. How long have you been at this practice (less than four years will not participate in final results)?
2. How would you describe the initial uptake (2021) of the COVID vaccine for a) adults b ) children c) infants

Nearly everyone, most, few, almost none

1. How would you describe the uptake of the most recent COVID booster for a) adults b ) children c) infants

Nearly everyone, most, few, almost none

1. Over the same time period early 2021- late 2023 has uptake of other (non-COVID vaccines) changed in a) adults b ) children c) infants (increased, stayed the same, decreased)
2. Have patient opinions changed over this time period?

COVID – positive, the same, negative about the vaccines.

Other vaccines – positive, the same, negative.

1. Please provide any specific comments you recall made by patients.
2. How have your opinions changed, if at all, about vaccines over the time period?

Thank you for your time.

E. Response Rate

In all, 124 physicians in Montgomery County who had been in their practice for more than four years replied in full to the survey. Rep. Dean’s constituency is the largest, and this was reflected by having the most physicians surveyed (48), compared with Fitzpatrick (37) and Scanlon (39). 19 physicians came from the two most Republican-leaning Pennsylvania House Districts.

F. Interpretation of Data

The data we obtained are imprecise, because they are primarily based on the recall (of up to four years) of busy physicians, each of whom deal with dozens of patients. Small differences over time or between districts may well be the result of poor recall or biases due to survey design. Nevertheless, significant differences are probably reliable and based on identifiable trends.

II. COVID Vaccine Uptake

As expected, most physicians reported very high initial uptake of the COVID vaccine among all groups, especially adults. Figure 1 represents the number of responses (Y axis) against time (2021 or 2023) and vaccine-recipient type (adult, child, infant). As the chart demonstrates, most physicians reported nearly every adult receiving a vaccine when first offered (a few may have had medical exemptions to vaccinations).

As noted above, when the mRNA COVID vaccines were first rolled out in late 2020 and early 2021, they were touted as more than 90% effective and that they would (or, at least, might) reduce transmission. Vaccines were also required for many jobs and for travel, etc. By late 2023, when the latest booster was made available, fewer adults were taking it, as well as far fewer children and almost no infants.

Perhaps this can be explained by a greater appreciation that the vaccines were less effective than originally touted, did not appreciably reduce transmission, were no longer required for jobs or travel, and that the side effects more widely explained. Additionally, the disease itself changed, becoming more contagious, but less deadly (though the long-term trajectory remains indeterminant).[13] By lowering viral loads, vaccines probably lowered transmission, but many vaccinated individuals still got the disease.[14] Many patients may also regard the side effects of vaccination—such as a sore arm and the possibility of feeling bad for a day or two—as not worthwhile, given that the disease itself appears little worse than a bad cold. Several physicians mentioned this as among the plausible reasons for declining uptake.

FIGURE 1: Montgomery County – COVID Vaccine Uptake

There was very little difference across the three U.S. House districts. While uptake was marginally lower in the Republican Rep. Fitzpatrick’s district, the difference was not statistically significant. In the two most Republican-leaning Pennsylvania House districts, however, there was a notable difference, as can be seen in Figure 2 and Figure 3. Initial uptake was not as great in these two districts, and it is almost non-existent for the most recent booster. This is noteworthy, given that Montgomery County follows Centers for Disease Control and Prevention (CDC) advice that everyone over six months old should receive the latest booster.[15] The vast majority of these districts’ patients are ignoring CDC advice.

FIGURE 2: Montgomery County (12D) Districts – COVID Vaccine Uptake

FIGURE 3: Montgomery County (2R) Districts – COVID Vaccine Uptake

A. Other Vaccines

COVID is one disease among many. Other diseases that require vaccinations obviously have not disappeared. Question 4 sought to gather information about the uptake of these other vaccines over the same period (early 2021 to late 2023). Here, the data are significant, as demonstrated in Figure 4. Not one physician reported an increase in vaccine uptake for these other diseases. While approximately a third reported no change, fully two-thirds (slightly more in the Republican areas) have seen a decrease in vaccination uptake.

This is a very broad measure and far more detailed surveys are required to understand exactly which vaccines are being missed—i.e., whether it is the annual (and not particularly effective) flu vaccines, or the far more important and less-frequent (often a one-off in childhood) vaccines for diseases such as measles, polio, or tuberculosis. The data below also do not show by how much vaccine rates are falling.

FIGURE 4: Non-COVID Vaccine Change in Uptake, 2021-2023

Nevertheless, that rates are falling is potentially worrying and deserving of attention.

III. Vaccine Opinions

The latter questions in the survey refer to opinions about vaccines and, where quantifiable, how they have changed, as well as specific comments made by patients (and the parents of patients) and physicians about vaccines. These responses do not rise much above anecdotes, but they may provide some insight into patient and physician concerns. These comments could also help to design more detailed surveys in the future.

1. The vast majority of physicians reported a large decline in support for COVID vaccinations (as reflected in uptake) and a much smaller, but still important, decline in support for all vaccines.
2. Most physicians report patient concerns about the safety of COVID (and, increasingly, other) vaccines. Patients are uncertain of, but worried about, social-media reports of vaccine harm. Given that social media was the only place that supported the notion that the SARS-CoV-2 virus originated in a lab—and permitted discussion of other theories and concerns, many of which turned out to be true—it is perhaps not surprising that many patients were inclined to worry about reports of vaccine harm that also appeared on social media. These patients were less likely to take the vaccine themselves, but more likely to take it than to let their children do so. This was especially true among the many patients who referred to the “lies” told by health authorities (Anthony Fauci was named repeatedly). A few patients appeared to be very angry about being mandated to take a potentially unsafe vaccine, even if they had recently had the disease.
3. Patients offered more subtle comments—“nuanced” was the word mentioned by more than one physician—about the scientific illiteracy of health authorities who demanded COVID vaccines even for people who had recently had the disease. This led to a “total” distrust of vaccine policy among some patients, which physicians reported has definitely contributed to lowering flu-vaccine uptake, although one physician reported that “it’s too early to tell for other vaccines.” Some physicians agreed with their patients that the advice was unscientific.
4. Some physicians also said that their trust in vaccination approval, efficacy, and health authorities’ advice had declined.

A. Discussion

A large NIH survey about vaccination opinions among 737 physicians was undertaken in May 2021, when COVID vaccines were taken in vast numbers.[16] The summary findings were that “10.1% of primary care physicians do not agree that, in general, vaccines are safe, 9.3% do not agree they are effective, and 8.3% do not agree they are important.”  Evidently, the vast majority of physicians accepted their safety, efficacy, and importance, but it is both interesting and relevant that a small minority did not.  One reason reported was that the pharmaceutical industry is not widely trusted and that some vaccinations, such as for flu, are often not that effective.

To ensure rapid distribution of COVID vaccines, pharmaceutical producers were given (temporary) immunity from liability related to vaccine-induced harm, which probably fueled some additional skepticism (a point physicians said a few patients made when refusing COVID vaccines).[17] This is obviously a tricky area, as the manufacturers might not have agreed to sell the vaccines in the United States without such protections.

By mid-2023, federal vaccine mandates as a requirement for federal jobs and international travel had been removed.[18] It is therefore not that surprising that the uptake of COVID vaccine boosters collapsed among infants and children, and fell markedly amongst adults. One comment made by a few physicians was that uptake was close to zero, as well, for adults under 40, while being nearly universal among adults over 70, or with co-morbidities. This likely demonstrates that those most at-risk were, indeed, reading the scientific situation correctly and taking the vaccine.

It is important not to overinterpret these results. The data could be the result of faulty recollections by busy physicians. Even if entirely accurate, they may reflect a temporary shift, rather than an actual trend in increased vaccine resistance. But these data are worrying if they are sustained and reflective more broadly than in one county in Pennsylvania.

IV. Conclusion

The development of COVID vaccines was a truly remarkable phenomenon. Within one year of the pandemic’s start, pharmaceutical companies had developed multiple vaccines, while the previous record for the fastest vaccine developed (for mumps) took four and half years.[19] These vaccines saved hundreds of thousands of lives, especially among the old and those with comorbidities who were most at risk from severe COVID.

But the vaccines were oversold, were not as effective as first touted, did not fully prevent transmission and, like most vaccines, posed some risks. By making them mandatory for jobs and travel, people who were disinclined to take them appear to have become more hostile to vaccines in general.  The exact reasons for the downturn in COVID vaccination are myriad. Some are due to vaccine failings, some to inappropriate political demands, but some are related to the disease changing to a more virulent but less harmful form, making vaccination less attractive.

Further research should establish whether the results in this survey are replicated over time and in larger groups. More importantly, there is a need to establish whether vaccine hesitancy applies across all vaccines or whether it is limited to COVID and seasonal vaccines with weak efficacy (such as influenza).

V. Appendix

Data from most recent U.S. Census and election for Montgomery County, Pennsylvania.[20]

Data for the two Republican-leaning Pennsylvania House districts.[21]

[1] COVID-19 Vaccines, U.S. Food & Drug Admin., https://www.fda.gov/emergency-preparedness-and-response/coronavirus-disease-2019-covid-19/covid-19-vaccines (last visited Feb. 15, 2024).

[2] Kathy Katella, Comparing the COVID-19 Vaccines: How Are They Different?, Yale Medicine (Oct. 5, 2023), https://www.yalemedicine.org/news/covid-19-vaccine-comparison.

[3] Huong Q. McLean, et al., Interim Estimates of 2022–23 Seasonal Influenza Vaccine Effectiveness — Wisconsin, October 2022–February 2023, Ctr. Disease Control & Prevention (Feb. 24, 2023), https://www.cdc.gov/mmwr/volumes/72/wr/mm7208a1.htm.

[4] COVID-19 Vaccinations in the United States, Ctr. Disease Control & Prevention, https://covid.cdc.gov/covid-data-tracker/#vaccinations_vacc-people-booster-percent-pop5 (last visited Feb. 16, 2024).

[5] Debunking COVID-19 Myths, Mayo Clinic (Sep. 2, 2021), https://data.cdc.gov/d/rh2h-3yt2/visualization (last visited Feb. 15, 2024).

[6] Colleen Moriarty, The Link Between Myocarditis and COVID-19 mRNA Vaccines, Yale Medicine (Jun. 24, 2021), https://www.yalemedicine.org/news/myocarditis-coronavirus-vaccine.

[7] Anouk Oordt-Speets, et al., Effectiveness of COVID-19 Vaccination on Transmission: A Systematic Review, MDPI (2023), https://www.mdpi.com/2673-8112/3/10/103.

[8] Kevin Liptak & Kaitlan Collins, Biden Announces New Vaccine Mandates That Could Cover 100 Million Americans, CNN (Sep. 9, 2021), https://www.cnn.com/2021/09/09/politics/joe-biden-covid-speech/index.html.

[9] Sara Diani, et al., SARS-CoV-2-The Role of Natural Immunity: A Narrative Review, Nat’l Ctr. Biotechnology Info. (Oct. 25, 2022), https://pubmed.ncbi.nlm.nih.gov/36362500/#:~:text=Conclusions%3A%20this%20extensive%20narrative%20review,SARS%2DCoV%2D2%20vaccination.

[10] Vaccines & Immunizations, U.S. Dept. Health & Human Serv., https://www.hhs.gov/vaccines/vaccines-national-strategic-plan/index.html (last visited Feb. 15, 2024).

[11] COVID-19 Vaccine Effectiveness, Ctr. Disease Control & Prevention, https://www.cdc.gov/respiratory-viruses/whats-new/covid-19-vaccine-effectiveness.html (last visited Feb. 15, 2024).

[12] Jonathan Chait, How Vaccine Skeptics Took Over the Republican Party. A Case Study in the Party’s Dysfunction, Intelligencer (Oct. 21, 2022), https://nymag.com/intelligencer/2022/10/how-vaccine-skeptics-took-over-the-republican-party.html; State Government Policies About Vaccine Requirements (Vaccine Passports), 2021-2022, Ballotpedia, https://ballotpedia.org/State_government_policies_about_vaccine_requirements_(vaccine_passports),_2021-2022 (last visited Feb. 15, 2024).

[13] Ádám Kun, et al., Do Pathogens Always Evolve to Be Less Virulent? The Virulence–Transmission Trade-Off in Light of the COVID-19 Pandemic, 74 Biol. Futura 69–80 (2023), https://link.springer.com/article/10.1007/s42977-023-00159-2.

[14] Anouk Oordt-Speets, et al., Effectiveness of COVID-19 Vaccination on Transmission: A Systematic Review, 3(10) COVID 1516-1527 (2023), https://www.mdpi.com/2673-8112/3/10/103.

[15] CDC Recommends Updated COVID-19 Vaccine for Fall/Winter Virus Season, Ctr. Disease Control & Prevention (Sep. 12, 2023), https://www.cdc.gov/media/releases/2023/p0912-COVID-19-Vaccine.html.

[16] Timothy Callaghan, et al., Imperfect Messengers? An Analysis of Vaccine Confidence Among Primary Care Physicians, 40(18) Vaccine 2588–2603 (Apr. 20, 2022), https://www.ncbi.nlm.nih.gov/pmc/articles/PMC8931689.

[17] Shayna Greene, Fact Check: Are Pharmaceutical Companies Immune From COVID-19 Vaccine Lawsuits?, Newsweek (Jan. 19, 2021), https://www.newsweek.com/fact-check-are-pharmaceutical-companies-immune-covid-19-vaccine-lawsuits-1562793.

[18] The Biden-?Harris Administration Will End COVID-?19 Vaccination Requirements for Federal Employees, Contractors, International Travelers, Head Start Educators, and CMS-Certified Facilities, White House (May 1, 2023), https://www.whitehouse.gov/briefing-room/statements-releases/2023/05/01/the-biden-administration-will-end-covid-19-vaccination-requirements-for-federal-employees-contractors-international-travelers-head-start-educators-and-cms-certified-facilities.

[19] Dave Roos, How a New Vaccine Was Developed in Record Time in the 1960s, History.com (Oct. 4, 2023), https://www.history.com/news/mumps-vaccine-world-war-ii.

[20] ArcGIS, https://experience.arcgis.com/experience/a560279ebf2844b2ba267d6f50602668/page/US-Congressional/?data_id=dataSource_8-185df68cfdd-layer-4%3A30%2CdataSource_9-185df6f79b7-layer-4%3A62, (last visited Feb. 15, 2024).

[21] ArcGIS, https://experience.arcgis.com/experience/a560279ebf2844b2ba267d6f50602668/page/PA-House/?data_id=dataSource_8-185df68cfdd-layer-4%3A30%2CdataSource_9-185df6f79b7-layer-4%3A62, (last visited Feb. 15, 2024).

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.

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.

In March 2023 I wrote a post reiterating my argument that grid reliability is not a public good, at least not according to the technical definition of a public good as nonexcludable and nonrival. Instead I argued that grid reliability is a common-pool resource, potentially somewhat excludable or at least differentiable, and if not nonrival at least congestible. Given recent discussions in electricity policy about reliability in general and winter reliability in particular, I think it’s worth reconsidering now.

Read the full piece here.