Critical race theorists and left-leaning behavioral economists (is there any other kind?) have been telling us for years that you cannot use rational actor theory to analyze discrimination. Examples:
Adam Benforado, Quick on the Draw: Implicit Bias and the Second Amendment, 89 Or. L. Rev. 1, 2-3 (2010):
Our commonsense narratives about racism and guns--centered on a conception of humans as autonomous, self-transparent, rational actors--are outdated and strongly contradicted by recent evidence from the mind sciences.
Advances in implicit social cognition reveal that most people carry biases against racial minorities beyond their conscious awareness. These biases affect critical behavior, including the actions of individuals performing shooting tasks. In simulations, Americans are faster and more accurate when firing on armed blacks than when firing on armed whites, and faster and more accurate in electing to hold their fire when confronting unarmed whites than when confronting unarmed blacks.
Charles Falck, Equitable Access: Examining Information Asymmetry in Reverse Redlining Claims Through Critical Race Theory, 18 Tex. J. C.L. & C.R. 101, 116 (2012):
As both critical race theory and behavioral economics would suggest, Posner's hypothesis about subprime borrowers fails, because consumers operate according to various cognitive biases--not purely according to rationality.
Rachel F. Moran, The Elusive Nature of Discrimination, 55 Stan. L. Rev. 2365, 2367 (2003)
In contrast to law and economics, critical race theory has concerned itself with how race is constructed through unconscious bias and institutional structures. Race scholars do not presume that rational choice is the sine qua non of human behavior. Instead, they try to unpack the reflexive habits and hidden assumptions that guide racial judgments.
Jerry Kang, Race.net Neutrality, 6 J. Telecomm. & High Tech. L. 1, 15-16 (2007)
... no one makes the unqualified claim that individuals always, without exception, behave rationally. And no one suggests that markets are perfect disciplinarians. So, the real debate is about how often and in what contexts do individuals and markets behave “rationally” in contexts where race matters. My only point here is that we have good reasons to be cautious of any robust rationality assumption.
... in his interview, Goldberg asked about an even more basic point of contention. A nuclear deal will be signed with an Iranian regime that promotes an intensely anti-Western and, as Obama readily admits, anti-Semitic state ideology. Goldberg wondered how Obama could believe that anti-Semitism was inherently irrational, while also believing that the Tehran regime was itself rational. ...
"Well the fact that you are anti-Semitic, or racist, doesn’t preclude you from being interested in survival," Obama said. "It doesn’t preclude you from being rational about the need to keep your economy afloat; it doesn’t preclude you from making strategic decisions about how you stay in power; and so the fact that [Iran's] supreme leader is anti-Semitic doesn’t mean that this overrides all of his other considerations."
This may be true enough, but it discounts how anti-Semitism could inform the regime's strategic and economic considerations. After all, in spreading anti-Semitism and supporting terrorism against Jewish and Israeli targets, the regime invited sanctions and a general isolation that's all but locked the country out of valuable consumer markets — a clear case of anti-Semitism precluding Tehran from "being rational about the need to keep your economy afloat."
Obama believes that the Iranian government's anti-Semitism is subject to the same rational cost-benefit calculus as any other aspects of a nation's behavior, even if anti-Semitism is itself irrational.
A few thoughts:
What possible evidence could Obama cite for the proposition that the Iranian leadership consists of rational actors who make rational choices?
If Obama really believes that Iran's leaders are guided by rational choice, why doesn't he embrace Chicago School economics more generally and its accompanying critique of regulation? What is his basis for picking and choosing when to apply rational choice theory?
Will CRS and behavioral economist folks take Obama to task for embracing a rational choice model of raging anti-semites?
This paper examines the regulation of outsider trading in EU and the US, highlighting the differences between the two legal systems and investigating the main implications of the different regulatory choices made in the two jurisdictions. Outsider trading can be defined as the sale or purchase of listed securities on the basis of material nonpublic information by individuals who do not qualify as “insiders”. While US law leaves considerable room to outsider trading, EU law unconditionally prohibits it. Constraining outsiders’ exploitation of material nonpublic information has a sound efficiency-grounded justification, but an unconditional ban on all informed trading by outsiders appears harmful: it hinders investors’ incentives in ferreting out new information, decreasing market efficiency and increasing agency costs of publicly traded firms. US law, with its selective limitation of outsider trading, appears largely immune from these consequences. EU law, to the contrary, has the potential to carry on such drawbacks.
Tingle, Bryce C., Bad Company! The Assumptions Behind Proxy Advisors' Voting Recommendations (May 11, 2015). Dalhousie Law Journal, Vol. 37, No. 2 (Fall 2014) . Available at SSRN: http://ssrn.com/abstract=2605275
The corporate governance challenge for Canada is to improve the quality of its corporate performance, which has been declining relative to its international peers for decades. This is quite different from the usual assumption that corporate governance is primarily a matter of controlling managerial self-dealing. While important, board monitoring of management is only one aspect of its role in a corporation; research suggests corporate governance arrangements have a significant impact on corporate outcomes, particularly in areas such as innovation where Canada lags.
Third-party proxy advisory firms, which provide advice to institutional investors in Canada on corporate governance matters, have grown in influence over the past decade. As securities regulators consider whether (and how) to treat them, an examination of the assumptions that underlie these advisors’ voting recommendations, and the influence these assumptions have on corporate decision-making, suggest these assumptions create perverse governance incentives and are contradicted by empirical research.
The Chancery Court just entered its order awarding plaintiffs' counsel, Jones Day, $2 million dollars in attorneys' fees and expenses. That's right, the attorneys get $2 million even though, as the Vice Chancellor notes, "the quantifiable benefit obtained in this litigation was $0." Thus, the defendants have to pay $2 million to counsel for helping the court determine that nothing they did harmed the corporation or its shareholders.
It could have been worse; plaintiffs' counsel asked for $11 million.
I'm afraid that this opinion will give plaintiffs' attorneys an incentive to search for problems with the process in conflict-of-interest cases just so they can get in on the Nine-Systems action and collect attorneys' fees. No harm to the corporation? No problem!
The only thing that makes sense is that Chancery is trying to drum up some business and bring corporate law litigation back to Delaware.
Corporate political activity has become one of shareholders' top concerns. We examine whether firms targeted by shareholder proposals show different campaign contributions and lobbying activities compared to non-targeted firms. We also ask whether different sponsors of shareholder proposals target different firms depending on the firms' partisan orientation. Using data on S&P 500 companies during the period between 2007 and 2013, we find that firms that spend more on campaign contributions and lobbying are more likely to be targeted by shareholder proposals. After controlling for firms' financial performance, governance characteristics and ownership structure, we also find that public pension funds and labor unions sponsors are more likely to target Republican-leaning firms, measured by the firms' campaign contributions. This finding suggests that increasing corporate political activity can intensify a tension between management and public pension fund and labor union shareholders and lead to more activism by these shareholders.
Min, Geeyoung and You, Hye Young, Active Firms and Active Shareholders: Corporate Political Activity and Shareholder Proposals (April 30, 2015). Virginia Law and Economics Research Paper No. 15; Virginia Public Law and Legal Theory Research Paper No. 28. Available at SSRN: http://ssrn.com/abstract=2601181
My longstanding conviction that state and local government and union pension funds were using shareholder activism to advance a liberal political agenda appears to be validated, at least in part.
Apparently my site has been hijacked by the gogardenclub.com redirect attack. I have deleted the Sitemeter widget, which reportedly is the source of the problem. If it happened to you in the past, please accept my apologies. If it happens again in the future, please let me know ASAP.
To go with this sort of light but spicy meal, I wanted a dry, fairly acidic, low oak white wine. The Foxen Chenin Blanc was a great choice. A lovely, clean bouquet dominated by apples and lemons. On the palate, it was crisp with bright acidity, clean, and suggestive of apples, pears, flint, lemons, and melon. Grade: B+
The Phelps Cab was a solid match. This was my last bottle (of 6) and it was probably the best. It had thrown enough sediment to justify decanting and, having done so, I let it breathe for about 45 minutes before serving it. The color remained a deep garnet. The bouquet was strong and clean, suggesting cassis, prunes, mocha java, and tobacco. On the palate, it was medium-bodied with a medium finish. Well balanced. Black cherries, plums, prunes, cedar, and tobacco. Grade: B++
She has a checkered, to put it charitably (failed, to put it more bluntly), business career and no political career whatsoever, having lost her previous run for elective office. It is the height of chutzpah to imagine that she is remotely qualified to be president. Or, since it’s the more likely endgame, for vice president either.
I would have serious qualms about any candidate who seeks the presidency without government experience, no matter how much value he or she produced for shareholders.
Which raises several questions. When Jesse Jackson ran for POTUS in 1984, 1988, and 2000, he had no government experience to speak of. Will Marcus confirm that he wasn't "remotely qualified to be president"? How about Wes Clark and Al Sharpton when they ran in 2004. If Clark's army experience counts, why not Fiorina's business experience?
For most people, pleading guilty to a felony means they will very likely land in prison, lose their job and forfeit their right to vote.
But when five of the world’s biggest banks plead guilty to an array of antitrust and fraud charges as soon as next week, life will go on, probably without much of a hiccup.
This lead a friend of mine on Facebook to observe that:
Next time you want to talk about the need for criminal wrongdoers to take personal responsibility, think of these wrongdoers. What kind of message do we send that we lock up people on three strikes for drug offenses but go easy on people who steal BIG money?
There's a core problem here. When you punish an entity, you're really punishing the entity's shareholders. The more severe the penalty, the worse of a hit the shareholders take. But the shareholders are not morally culpable for the entity's wrongdoing. Hence, the proper approach to punishing organizational misconduct is to punish those agents of the organization who committed the wrongdoing (and those who authorized it). This is just basic stuff, but it gets ignored all the time. See, e.g., Jennifer H. Arlen & William J. Carney, Vicarious Liability for Fraud on Securities Markets: Theory and Evidence, 1992 U. ILL. L. REV. 691.