Professor Birdthistle has a very thoughtful reply to my earlier post over at the Conglomerate on Jones v. Harris and behavioral economics.  I thank Professor Birdthistle for his reply.  I’ve learned a great deal about Jones v. Harris from reading his posts at the Conglomerate and have no doubt that I’ll learn more from this exchange.  The thrust of my original post was that, in general, my view was that behavioral law and economics has been too quick to rely on findings in the behavioral/ experimental literature demonstrating systematic deviations from rationality to justify paternalistic regulation.

Read the full piece here.

Much has been made about the importance of Jones v. Harris as a battle in the ongoing war between behavioral economics  and rational choice/neoclassical framework (see, e.g. the NYT).   If the case if to be about the appropriate economic methodology or model for assessing legal questions, it is definitely an interesting turn to have Judge Easterbrook representing the rational choice economists while Judge Posner (who is simultaneously taking some flack for fast and loose and incorrect uses of macroeconomics) defends the behavioral view, considering that the latter wrote an important critique of the behavioral law and economics literature (here is an excellent summary of Posner’s opinion from Professor Birdthistle).  Professor Ribstein frames the issue of Jones v. Harris and the New Paternalism nicely with a prediction…

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A big chunk of the fraudulent advertising (diet, exercise, work-at-home, credit repair) prosecuted by the FTC involves a testimonial advertisement that mentions a number, e.g., “I lost 74 pounds wearing slimming insoles.” Some consumers do not seem to understand that the results for the endorsers may not be typical, despite the disclaimer required by the FTC, “results not typical.”

Read the full piece here. 

In light of the recent political focus on healthcare, several Congressional bills propose to single out a class of contracts between pharmaceutical companies for closer antitrust scrutiny.  Oftentimes, a pharmaceutical company will engineer a functionally identical substitute to a “brand name” drug with specific appeal to consumers.  This substitute – with the chemical properties of the known drug but a different name – is known as a “generic drug,” or simply a “generic.”  In an attempt to preserve the legal monopoly a patented brand-name enjoys, the branded drug’s producer will sometimes offer the generic’s producer a payment to delay entry into the market for a fixed amount of time.  Known as a “reverse payment settlement” – or colloquially as “pay for delay” – these agreements are at the intersection of contemporary fears and debates about healthcare and a debate as old as the law of competition itself.

Read the full piece here.

I have said it before and I’ll say it again: All of this hand wringing over executive compensation seems to exist in a parallel world where corporate executives have no risk aversion, where there is no real competition for managerial talent, and where firms can only take on too much–never too little–risk.  And this in a day and age (the age of never-ending financial reform regulation, Lehman/Bear, enormous public scrutiny of financial and banking industries, etc.) when the downside from excessive risk-taking is now either a) extremely large or b) non-existent (but only because of guaranteed government bail-outs).  In either case, fiddling with compensation schemes will not help matters.

Read the full piece here. 

Professor Joe Brodley, after a long and distinguished career as an antitrust scholar, retired at the end of the Spring 2009 semester. Boston University Law School will host a symposium honoring Joe’s contributions to Antitrust on September 18, 2009. The Boston University Law Review will publish the contributions.

Read the full piece here. 

University of Chicago economist (and behavioralist doyen) Richard Thaler thinks “the question of whether a ‘public option’ should be part of the health care solution” is just “one big distraction.” In Sunday’s New York Times, Thaler argues that the debate over the public option is a “red herring” if, as President Obama insists, the public plan will have to break even and won’t be granted “the power to impose special deals with suppliers like hospitals and drug companies.” If those two conditions are satisfied, Thaler contends, the public plan is unlikely to have much success and certainly won’t drive out private insurers.

Read the full piece here.

I have great respect for my sociologically trained brethren and sistren (cistern?) but am not sure what, exactly, they are asking for. One sociologist thinks economists downplay race and gender — “their supply and demand curves don’t deal with these questions” — which is silly, as much of the analysis of subprimes by labor economists focuses exactly on this. I’m not claiming that sociology (or anthropology or history or psychology) has no useful policy implications, of course, only asking for specifics.

Read the full piece here.