cssi/SciSciGPT-SciSciNet huggingface dataset:
Prices and investment with collateral and default

This paper uses the framework of an OLG economy with three-period lived agents in which a durable good serves as collateral for loans, to study the effect of an unanticipated income shock when the economy is in a steady state equilibrium. We focus on the consequence of default on loans when the value of the collateral falls below the value of the debt it secures. We analyze the impulse response functions of the price and production of the durable good and show that there is an asymmetry between the response of the price and investment of the durable good to a positive and a negative income shock arising from default on the collateralized loans. We show that this asymmetry can be seen in the data on housing prices and construction and is attributable to the default on mortgages in periods of decreasing prices which acts as a turbo mechanism magnifying the decline in investment.
Equilibrium Pricing and Optimal Hedging in Electricity Forward Markets

Spot power prices are volatile and since electricity cannot be economically stored, familiar arbitrage-based methods are not applicable for pricing power derivative contracts. This paper presents an equilibrium model implying that the forward power price is a downward biased predictor of the future spot price if expected power demand is low and demand risk is moderate. However, the equilibrium forward premium increases when either expected demand or demand variance is high, because of positive skewness in the spot power price distribution. Preliminary empirical evidence indicates that the premium in forward power prices is greatest during the summer months. WHOLESALE POWER MARKETS, where producers trade electricity among themselves and with power-marketing and power-distribution companies, have grown rapidly in recent years. 1 The U.S. Department of Energy ~2000! reports that U.S. wholesale power transactions during 1999 amounted to approximately 2.6 billion megawatt hours ~MWh!, or about $85 billion. The U.S. wholesale power market is soon likely to comprise the world’s largest commodity market. Electricity as a commodity has many interesting characteristics, most of which stem from the fact that it cannot be economically stored. 2 Market
Does Electoral Manipulation Discourage Voter Turnout? Evidence from Mexico

Does electoral manipulation reduce voter turnout? The question is central to the study of political behavior in many electoral systems and to current debates on electoral reform. Nevertheless, existing evidence suggests contradictory answers. This article clarifies the theoretical relationship between electoral manipulation and turnout by drawing some simple conceptual distinctions and presents new empirical evidence from Mexico. The deep electoral reforms in 1990s Mexico provide a hitherto-unexploited opportunity to estimate the effect of electoral manipulation on turnout. The empirical strategy makes use of variation over time and across the states of Mexico in turnout and in electoral manipulation. The analysis finds that electoral manipulation under the PRI discouraged citizens from voting. Conceptually, the article shows that true and reported turnout need not move in the same direction, nor respond in the same way to electoral manipulation.
Pass in Review: Due Process and Judicial Scrutiny of Classification Decisions of the Selective Service System

Judicial review of Selective Service classification decisions has passed through three broadening stages. Until the end of the Second World War, the only question the courts asked was whether the registrant's local draft board had acted in excess of its jurisdiction. From 1946 through the late 1960s, the courts asked whether the local board's decision was supported by a basis in fact, and federal judges searched registrants' selective service files to see whether 'they' could find one. Beginning in the late 1960s, more and more courts began to demand that local draft boards state the reasons for their decisions. The result was a more searching examination of local boards' decisions and a dramatic decline in conviction rates because so many decisions were found wanting. The courts justified the new requirement on grounds of facilitation of both administrative decisions and judicial review. This article suggests that the courts should instead base the statement-of-reasons requirement squarely on the Due Process Clause. The Selective Service System determines whether a person shall be required involuntarily to serve two years in the military, possibly at the risk of life and limb. Those deprivations are as real and as severe as any to which the Due Process Clause is addressed.
The role of the Fannie Mae/Freddie Mac duopoly in the American housing market

Purpose – The purpose of this paper is to provide a brief introduction to the role of the Fannie Mae/ Freddie Mac duopoly in the American housing market.Design/methodology/approach – First, the paper defines the “government sponsored enterprise,” which is the type of hybrid public/private entity that Fannie and Freddie are and provides an introduction to the other significant government sponsored enterprises. It then explains what Fannie and Freddie do in the American mortgage market and provides a brief history of how the two companies developed. Finally, it evaluates the two companies as duopolists in the conforming mortgage market.Findings – The paper concludes by suggesting that the current financial crisis presents an opportunity to rethink whether the Fannie/Freddie duopoly continues to serve the public interest.Research limitations/implications – Because of its length, the paper does not review alternative approaches to the status quo that the US Government can take to ensure that it has a stable f...
Origins and Destinies: Immigration to the United States Since World War II

Contemporary immigration to the United States and the formation of new ethnic groups are the complex and unintended social consequences of the expansion of the nation to its post-World War II position of global hegemony. Immigrant communities in the United States today are related to a history of American military, political, economic, and cultural involvement and intervention in the sending countries, especially in Asia and the Caribbean Basin, and to the linkages that are formed in the process that open a variety of legal and illegal migration pathways. The 19.8 million foreign-born persons counted in the 1990 U.S. census formed the largest immigrant population in the world, though in relative terms, only 7.9% of the U.S. population was foreign-born, a lower proportion than earlier in this century. Today's immigrants are extraordinarily diverse, a reflection of polar-opposite types of migrations embedded in very different historical and structural contexts. Also, unlike the expanding economy that absorbed earlier flows from Europe, since the 1970s new immigrants have entered an “hourglass” economy with reduced opportunities for social mobility, particularly among the less educated, and new waves of refugees have entered a welfare state with expanded opportunities for public assistance. This paper seeks to make sense of the new diversity. A typology of contemporary immigrants is presented, and their patterns of settlement, their distinctive social and economic characteristics compared to major native-born racial-ethnic groups, and their different modes of incorporation in—and consequences for—American society are considered.
Benefits and Costs of a Targeted Intervention Program for Youthful Offenders: The YouthBuild USA Offender Project

This paper reports on a benefit-cost analysis of a targeted intervention program, the YouthBuild USA Offender Project (YBOP), aimed at low-income, criminal offenders who are 16–24 years old. Using data on 388 participants, we find: (1) evidence of reduced recidivism and improved educational outcomes that exceed our expectations based on similar cohorts and (2) evidence consistent with a positive benefit-cost ratio, indicating that every dollar spent on the YBOP is estimated to produce a return on investment between 24,000.
Liquidity risk, credit risk, and the federal reserve’s responses to the crisis

In responding to the severity and broad scope of the crisis, the Federal Reserve (the Fed) has aggressively utilized both traditional monetary policy instruments, as well as innovative tools to provide liquidity. In this paper, the Fed’s actions are examined in light of the evolution of risk during the crisis. The empirical evidence supports the Fed’s views on the primacy of liquidity constraints in the earlier stages of the crisis and the increased prominence of counterparty credit risk as the crisis evolved in 2008. I conclude that an understanding of the prevailing risk environment is necessary to evaluate when central bank programs are likely to be effective and under what conditions the programs might cease to be necessary.
Productivity Effects of Information Diffusion in Networks

The National Science Foundation, Cisco Systems, France Telecom and the MIT Center for Digital Business
Analytical Results and Efficient Algorithm for Optimal Portfolio Deleveraging with Market Impact

In this paper, we consider an optimal portfolio deleveraging problem, where the objective is to meet specified debt/equity requirements at the minimal execution cost. Permanent and temporary price impact is taken into account. With no restrictions on the relative magnitudes of permanent and temporary price impact, the optimal deleveraging problem reduces to a nonconvex quadratic program with quadratic and box constraints. Analytical results on the optimal deleveraging strategy are obtained. They provide guidance on how we liquidate a portfolio according to endogenous and exogenous factors. A Lagrangian method is proposed to solve the nonconvex quadratic program numerically. By studying the breakpoints of the Lagrangian problem, we obtain conditions under which the Lagrangian method returns an optimal solution of the deleveraging problem. When the Lagrangian algorithm returns a suboptimal approximation, we present upper bounds on the loss in equity caused by using such an approximation.
Sulfur Dioxide Compliance of a Regulated Utility

Abstract Electric utilities can reduce sulfur dioxide emissions through a variety of strategies, and the cost of abatement can be minimized using tradable permits as under the Clean Air Act Amendments of 1990. Previous theoretical work has analyzed effects of public utility commission regulations on a utility's choice between permits and a single continuous “abatement technology.” Our numerical model considers discrete choices among three abatement technologies. Using illustrative parameters, we find that regulatory rules could more than double the cost of sulfur dioxide compliance. They can even make costs with allowance trading higher than costs with command and control regulation.
On Clandestine Warfare

Common moral judgments on many types of clandestine warfare, referred to by some as terrorism, seem to be more nuanced and less severe than our current legal judgments. This paper begins by offering a detailed typology of clandestine operations and measures to combat them, a few general reflections on the laws of war, and a critique of those laws as they now stand. It then proposes a substantial revision of the laws which govern clandestine warfare based on four basic principles of the laws and the morality of just war: the independence of jus in bello from the jus ad bellum; the condemnation of perfidy; the immunity of noncombatants from attack; and quarter for lawful combatants when captured. With these four basic principles in mind, the paper concludes with a model "International Draft Convention on Clandestine Warfare" and a model "Draft Federal Act Concerning Armed Organizations".
Distorted Gravity: The Intensive and Extensive Margins of International Trade

By considering a model with identical firms, Paul Krugman (1980) predicts that a higher elas ticity of substitution between goods magnifies the impact of trade barriers on trade flows. In this paper, I introduce firm heterogeneity in a simple model of international trade. When the distribu tion of productivity across firms is Pareto, which is close to the observed size distribution of US firms, the predictions of the Krugman model with representative firms are overturned: the impact of trade barriers on trade flows is dampened by the elasticity of substitution, and not magnified. In Krugman (1980), identical countries trade differentiated goods despite the presence of trade barriers because consumers have a preference for variety. If goods are less substitutable, con sumers are willing to buy foreign varieties even at a higher cost, and trade barriers have little impact on bilateral trade flows. Total exports from country A to country B are given by the following expression:
Execution in Virginia, 1859: The Trials of Green and Copeland

This essay tells the story of Shields Green and John Copeland, two black men who joined John Brown’s raid on Harper’s Ferry. Along with Brown and several others, Green and Copeland were taken prisoner in the aftermath of the failed insurrection, and they were brought to trial in nearby Charlestown on charges of murder and treason. Unlike Brown, who was treated respectfully by his captors, Green and Copeland were handled roughly. Copeland in particular was subjected to a harsh interrogation that was criticized even by pro-slavery Democrats in the North. The black prisoners did, however, have the benefit of a remarkable attorney – George Sennott of Boston. Unlike virtually all of the other lawyers at the Harper’s Ferry trials, Sennott boldly condemned slavery and announced that he was honored to defend the black insurrectionists. Sennott also employed a creative legal strategy in which he raised the Dred Scott decision as a defense to the treason charge. If black men could not be citizens, he argued, they likewise could not be guilty of treason. The tactic was only partially successful. Green and Copeland were acquitted of treason but convicted nonetheless of murder. Even after pronouncing the death penalty, the Virginia authorities continued their racist treatment of the prisoners. Green and Copeland were executed separately from their white comrades – segregation on the gallows – and their corpses were turned over to medical students for dissection, despite the frantic efforts of Copeland’s family to retrieve his body for decent burial. Throughout his ordeal, and right up until the time he faced the noose, John Copeland held to his ideals. On the morning of his execution he wrote a moving letter to his parents in which he expressed devotion to the “holy cause” for which he would die, while condemning “the demands of the cruel and unjust monster Slavery.”
Differences in income elasticities and trends in real exchange rates

Abstract One might expect that differences in income elasticities in trade and/or differences in growth rates among countries would give rise to strong secular trends in real exchange rates; for example, fast-growing countries might need steady depreciation to get the world to accept their growing exports. In fact, however, income elasticities are systematically related to growth rates by the ‘45-degree rule’, under which fast-growing countries appear to face high income elasticities of demand for their exports, while having low income elasticities of import demand. The net effect of this relationship between elasticities and growth rates is that secular trends in real exchange rates are much smaller than one might otherwise have expected: relative PPP holds fairly well. This paper documents the existence of a ‘45-degree rule’, and suggests an explanation in terms of increasing returns and product differentiation.
A Trap for the Unwary: The Sixth Amendment Right to Counsel After Montejo v. Louisiana

An analysis of the Sixth Amendment right to counsel after the 2009 U.S. Supreme Court decision Montejo v. Louisiana.
The Hot-Hand Fallacy: Cognitive Mistakes or Equilibrium Adjustments? Evidence from Major League Baseball

We test for a “hot hand” (i.e., short-term predictability in performance) in Major League Baseball using panel data. We find strong evidence for its existence in all 10 statistical categories we consider. The magnitudes are significant; being “hot” corresponds to between one-half and one standard deviation in the distribution of player abilities. Our results are in notable contrast to the majority of the hot-hand literature, which has generally found either no hot hand or a very weak hot hand in sports, often employing basketball shooting data. We argue that this difference is attributable to endogenous defensive responses: basketball presents sufficient opportunity for transferring defensive resources to equate shooting probabilities across players, whereas baseball does not. We then develop a method to test whether baseball teams do respond appropriately to hot opponents. Our results suggest teams respond in a manner consistent with drawing correct inference about the magnitude of the hot hand except fo...
The strategy of manipulating joint decision-making

We study a model of strategic persuasion based on the theory of cheap talk, in which a better-informed agent manipulates two decision-makers’ joint decision on alternative proposals. With the heterogeneity of two decision-makers’ value of the outside option, only the decision-maker with the better outside option is critical in determining whether communication is truthful, overselling, or ineffective.
Anti-Federalist Procedure

Table of ContentsI. Introduction 234II. Anti-Federalist Procedure 238A. Implied Preemption of State Law Actions 238B. Federally-Imposed Litigation Reform 2401. Attempts to Limit State-Imposed Punitive Damages....... 2412. Securities Litigation Uniform Standards Act 2433. Class Action Fairness Act 2454. Lawsuit Abuse Reduction Act 246C. Usurpation of State Jurisdiction 2471. Expansive Federal Question Jurisdiction 2482. Removal Under the Complete Preemption Doctrine .......2513. Expansive Supplemental Jurisdiction 254D. Federal Review of State Judicial Determinations 2561. Due Process Remittitur 2572. Bush v. Gore 2583. The Case of Terri Schiavo 263III. Analysis & Critique 264A. A Misuse of the Commerce Clause Power 265B. Violation of the Guarantee Clause 268C. An Affront to Federalism 271D. Exceeding Article Ill's Grant of Jurisdiction 275E. Doctrinal Hypocrisy 276IV. Towards Federalist Procedure 281A. Limited Preemption 2811. Abolition of Implied Preemption 282a. Express Preemption Requirement 282b. Scope of Preemption Limited to Terms of Express Provision 283c. Savings Clauses as a Bar to Implied Preemption ......2842. Narrow Construction 285B. The Proper Regulation of Interstate Commerce 287C. Narrowly Construed Federal Jurisdiction 2881. Adoption of Holmes's "Creation Test" 2882. Abolition of the Complete Preemption Doctrine 2903. Legislative Overruling of Allapattah Services 291D. General Principles 292V. Conclusion 293"[T]he new federal government will . . . be disinclined to invade the rights of the individual States, or the prerogatives of their governments."1"[T]he Constitution of the United States . . . recognizes and preserves the autonomy and independence of the States-independence in their legislative and independence in their judicial departments. . . . Any interference with either, except as [constitutionally] permitted, is an invasion of the authority of the State and, to that extent, a denial of its independence."2I. IntroductionThe understanding expressed by these opening quotes-that the national government was designed to be one of limited powers that would refrain from encroaching upon the sphere of authority reserved for the states-is at the core of the long ascendant legal doctrine of federalism.3 Familiar to all by now, modern-day federalism, generally, is a doctrine that takes constitutional limits on federal power seriously and demands respect for the sovereignty of states, protecting them against wayward impositions on their authority. …
Patterns of rational default

Abstract In this paper, we move closer to the interests of empirical research by providing the entire distribution of default’s severity, not just a summary total. The total price of a mortgage’s default option already provides a rough summary statistic of the unconditional expected severity of default, but as will be seen, distributions of severity are both disperse and skewed and so inadequately described by even their conditional means. The results make it clear that the likelihood of default and the likely magnitude of that default must be treated as separate phenomena.
Religiosity and the Impact of Religious Secondary Schooling

Using a nationally representative longitudinal survey and incorporating propensity score matching methods, we follow secondary school students post-graduation to determine how Catholic and private ...
Survival of the Misfittest- Stakeholder enactment as performance buffer for contingency misfits.

This study explores how contingency misfit can possibly be compensated. The paper particularly focuses on stakeholder enactment as a dynamic adaptation mechanism to overcome configurational misfit....
Does the Ideological Dispersion of Parties Mediate the Electoral Impact of Valence? A Cross-National Study of Party Support in Nine Western European Democracies

Previous empirical research has found evidence suggesting that the character-based valence attributes of parties, such as competence and integrity, can have notable effects of levels of electoral support (Clark, 2009; Mondak, 1995). A related strand of literature analyzes the importance of parties’ policy positions. In this study, we bring together research on valence and party dispersion to examine whether the ideological dispersion of parties in a party system mediates the electoral impact of valence. We perform empirical analyses covering nine Western European countries over the period 1976 to 2003, and test the hypothesis that when parties are more ideologically proximate to the mean voter position, character-based valence attributes will be of greater significance in determining parties’ electoral fortunes. Surprisingly, we find no support for this hypothesis. Instead, our analyses suggest that the more ideologically dispersed parties are, the more likely it is that character-based valence attributes...
Love thy neighbor: trade, migration, and social capital

Abstract Standard international trade theory suggests indifference between free trade and free migration, as both can lead to factor price equalization. Rich countries, however, appear to prefer free trade to free migration. This paper explains this preference in terms of the concept of social capital. The movement of people differs from the movement of goods and services, because people create attachments with those with whom they share social capital, including norms, language, customs, values and culture. Migration affects social capital in both the countries of emigration and immigration. In the paper four types of externalities associated with migration are identified and a model is set out that examines trade and migration policy (and changes in migration costs) under alternative assumptions about the internalization of these externalities. Irrespective of the degree of internalization of externalities, the countries that people emigrate from gain from trade liberalization and from preferential trade with richer countries to which immigration takes place, while the latter countries gain from immigration controls. The likelihood that the emigration countries gain from free migration increases with the degree of internalization of the externalities.
Salience in Quality Disclosure: Evidence from the U.S. News College Rankings

This paper investigates the impact of college rankings, and the visibility of those rankings, on students’ application decisions. Using natural experiments from U.S. News and World Report College Rankings, we present two main findings. First, we identify a causal impact of rankings on application decisions. When explicit rankings of colleges are published in U.S. News, a one-rank improvement leads to a 1-percentage-point increase in the number of applications to that college. Second, we show that the response to the information represented in rankings depends on the way in which that information is presented. Rankings have no effect on application decisions when colleges are listed alphabetically, even when readers are provided data on college quality and the methodology used to calculate rankings. This finding provides evidence that the salience of information is a central determinant of a firm's demand function, even for purchases as large as college attendance.
Asset Allocation with a High Dimensional Latent Factor Stochastic Volatility Model

We investigate the implications of time-varying expected return and volatility on asset allocation in a high dimensional setting. We propose a dynamic factor multivariate stochastic volatility (DFMSV) model that allows the first two moments of returns to vary over time for a large number of assets. We then evaluate the economic significance of the DFMSV model by examining the performance of various dynamic portfolio strategies chosen by mean-variance investors in a universe of 36 stocks. We find that the DFMSV dynamic strategies significantly outperform various benchmark strategies out of sample. This outperformance is robust to different performance measures, investor’s objective functions, time periods, and assets.
A taste for science? PhD scientists’ academic orientation and self-selection into research careers in industry

Abstract Recent research on industrial and academic science draws on the notion that academically trained scientists have a strong “taste for science”. However, little attention has been paid to potential heterogeneity in researchers’ taste for science and to potential selection effects into careers in industry versus academia. Using survey data from over 400 science and engineering PhD students, we examine the extent to which PhD students’ taste for science (e.g., desire for independence, publishing, peer recognition, and interest in basic research) and other individual characteristics predict preferences for research careers in industry versus academia. Our results suggest that PhD students who prefer industrial employment show a weaker “taste for science”, a greater concern for salary and access to resources, and a stronger interest in downstream work compared to PhD students who prefer an academic career. Our findings have important implications for innovation research as well as for managers and policy makers.
Choosing Among Imprecise American State Parentage Laws

Not too long ago American state laws chiefly designated parentage at precise moments in time. One became a parent upon giving birth; upon having one’s spouse give birth; upon formal adoption; upon completion of a birth certificate or a voluntary paternity acknowledgment; or upon a paternity case judgment. These parentage designations in one state would usually be respected by other states, even though certain parentage designations – as with a marital paternity presumption or a voluntary parentage acknowledgment – could later be voided, as through a rebuttal or recission occurring without a parental rights termination proceeding and at no precise moment in time. Today American state laws increasingly also allow for parentage designations to be based on conduct occurring at no precise moment in time, as with residing with and supporting a child, typically called de facto or presumed parenthood. Such designations are also sometimes voidable due to earlier conduct occurring at no precise moment in time.When conduct relevant to legal parentage occurs in one state and legal parentage is later to be initially determined in another state, the second state’s court frequently fails to respect the imprecise parentage laws of the state where the conduct occurred. Comparably, the second state’s court often fails to respect the first state’s norms on voiding legal parentage though the relevant conduct occurred there. While respect is not always due, applications by the second state’s court of its own parentage laws should not be automatic. Yet proposed uniform, as well as federal and state, statutes suggest this mandate.This paper urges that a second state’s court should explore in parentage cases whether there are conflicting, imprecise parentage laws and, if so, whether it should utilize its own choice of law rules to resolve any conflict. This may mean, as when choice of law rules compel an interest analysis, that the resolution of which state’s imprecise parentage law controls may vary depending upon context. For example, parentage law choices may differ in multistate child support and childcare cases where an alleged parent lives in the forum while the child and custodial parent live outside the forum.
Specification Analysis of Continuous Time Models in Finance

The paper describes the use of the Gallant-Tauchen efficient method of moments (EMM) technique for diagnostic checking of stochastic differential equations (SDEs) estimated from financial market data. The EMM technique is a simulation-based method that uses the score function of an auxiliary model as the criterion to define a generalized method of moments (GMM) objective function. The technique can handle multivariate SDEs where the state vector is not completely observed. The optimized GMM objective function is distributed as chi-square and may be used to test model adequacy. Elements of the score function correspond to specific parameters and large values reflect features of data that a rejected SDE specification does not describe well. The diagnostics are illustrated by estimating a three-factor model to weekly, 1962-1995, term structure data comprised of short (3 month), medium (12 month), and long (10 year) Treasury rates. The Yield-Factor Model is sharply rejected, although an extension that permits the local variance function to be a convex function of the interest rates comes much closer to describing the data.
On a Need-to-Know Basis: How the Distribution of Responsibility Between Couples Shapes Financial Literacy and Financial Outcomes

Many consumers suffer from low levels of financial literacy, and attempts to increase this dimension of consumer expertise via educational interventions are typically unsuccessful. We propose that many of these apparent deficits in literacy and learning may be caused by a cognitively efficient distribution of responsibility for knowledge and decision-making in different domains between relationship partners. New relationship partners adopt specialized domains of responsibility quickly and intuitively in a process guided more by circumstantial factors than by matching tasks with aptitudes (study 1). Cross-sectional data from consumers in long-term relationships provide evidence that distributions of responsibility for financial decision-making between partners may give rise to differences in financial literacy, such that the financial specialist develops expertise in this area while the non-specialist does not (study 3). This ever-growing gap in financial literacy is generally unrecognized by consumers (studies 2, 4), despite being linked to corresponding differences in both financial decision-making (studies 5, 6) and financial information search (study 6). Consumers seem to develop expertise on a “need to know” basis. We argue that offloading responsibility to a relationship partner may eliminate this need in the present, while simultaneously creating barriers to developing expertise if and when it is needed in the future.
Chevronizing Foreign Relations Law

A number of judge-made doctrines attempt to promote international comity by reducing possible tensions between the United States and foreign sovereigns. For example, courts usually interpret ambiguous statutes to conform to international law and understand them not to apply outside of the nation’s territorial boundaries. The international comity doctrines are best understood as a product of a judicial judgment that in particular contexts the costs of deference to foreign interests are lower than the benefits to American interests. Sometimes Congress balances these considerations and incorporates its judgment in a statute, but usually it does not. In such cases, executive interpretations should be permitted to trump the comity doctrines, as long as those interpretations are reasonable. This conclusion is supported both by considerations of institutional competence and by the distinctive position of the President in the domain of foreign affairs. It follows that if the executive wants to interpret ambiguous statutes to conflict with international law or to apply extraterritorially, it should be permitted to do so. The analysis of the interpretive power of the executive can be justified by reference to the Chevron doctrine in administrative law, which similarly calls for deference to executive interpretation of statutory ambiguities. Sometimes the Chevron doctrine literally applies to executive interpretations; sometimes it operates as a valuable analogy. At the same time, the Chevron principle is qualified by doctrines requiring a clear congressional statement, especially when constitutionally sensitive rights are involved. These claims have many implications for legal issues raised by the war on terror, including those explored in the Hamdi and Hamdan cases. authors. Eric A. Posner is Kirkland & Ellis Professor of Law, University of Chicago. Cass R. Sunstein is Karl N. Llewellyn Distinguished Service Professor of Jurisprudence, University of Chicago. Thanks to Curt Bradley, Jacob Gersen, Jack Goldsmith, Anup Malani, Matthew Stephenson, David Strauss, and participants at a workshop at the University of Chicago Law School for helpful comments; to Stacey Nathan for excellent research assistance; and to Derek Jinks and Neal Katyal for their stimulating critique. POSNER_SUNSTEIN_3-09-07_POST-OP 4/16/2007 2:58:44 PM chevronizing foreign relations law 1171 article contents
The constant causes of never-ending faddishness in the behavioral and social sciences

Summary The history of the behavioral and social sciences contains endless sequences of conceptual and methodological fads. Disappointed with the results of their current concepts and methods, researchers pursue new topics or approaches in the hope that they will bring better results. In time, however, the new fads too disappoint. The wide spread and persistence of disappointment evidence the influence of common and fundamental misbeliefs about scientific methodology. This article points to the detrimental effects of four specific misbeliefs: that research lends itself to mass production, that mechanistic descriptions adequately portray behavioral and social processes, that generalizations ought to be broad, and that statistical methods provide useful insights even if researchers misuse them. Detrimental ideas such as these can survive scrutiny and evaluation because researchers cannot agree about what effective research looks like. Lacking reliable indicators of research effectiveness, researchers both flit capriciously from one idea to another and adhere stubbornly to unproductive ideas.
Naked Self-Interest? Why the Legal Profession Resists Gatekeeping

This Article asks and answers the following questio n: why does the legal profession resist gatekeeping? Or, put anothe r way, why do lawyers resist duties that require them to act to avert har m to their corporate client, its own shareholders, and—possibly—the capital markets? While acknowledging that the economic self-interest of th e profession is an undeniable force fueling the bar’s opposition to ga tekeeping, this Article argues that the characterization of naked rent-seek ing behavior is too simplistic. It argues that economic self-interest e xerts a more subtle influence than the conventional story would suggest . In addition, the legal profession’s resistance to gatekeeping is grounded in lawyers’ internalization of attitudes held by the corporate managers serving as the clients’ representatives and lawyers’ lack of empat hy for potential shareholder-victims. In short, under-examined psych ological forces other than economic self-interest loom large in the profe ssion’s resistance to gatekeeping.
The Evolution of Coercive Institutional Punishment

Institutional punishment plays a central role in human societies. Yet research in evolutionary game theory has focused almost exclusively on peer punishment. Here we present a model for the evolution of institutional punishment. We consider a set of states (“kingdoms”), each consisting of a number of individuals (“subjects”) and a single leader (“king”). Subjects choose how much to pay to the king as tribute. The king chooses how much to punish his subjects based on their tribute payment level, in an effort to exact as much tribute as possible. We find the existence of both coercive Nash equilibria with punishment and high tribute payments, and noncoercive Nash equilibria with no punishment and no tribute payments. We also examine stochastic coevolutionary dynamics using agent-based simulations. We find that within a single state, the more intensely the king punishes, the more subjects evolve to pay in tribute. The king earns the most when both punishment is strong and subjects are accurate in their learning. When we consider co-evolution occurring at the level of the king as well as the subject, we see that kings evolve to punish heavily, as long as subjects are sufficiently accurate and frequent in their learning, and learn predominately from subjects in the same kingdom. If citizens have error-prone learning and/or are slow to update their strategies, however, selection leads to kings who punish little. Thus confusion is collectively beneficial for subjects. In sum, we show circumstances under which natural selection can favor the emergence of institutional punishment as a tool of coercion.
Inherent Attorney Conflicts of Interest Under ERISA: Using the Model Rules of Professional Conduct to Discourage Joint Representation of Dual Role Fiduciaries

Most people who have read the United States Supreme Court’s opinion in Varity Corp. v. Howe are struck by the unbelievable machinations in which an employer will engage to deprive his employees of their rightful health benefits under ERISA. In Varity, the company, acting in the dual role of employer and plan fiduciary with regard to the company’s health plan, carried out a devious scheme to rid itself of its unprofitable divisions. In so doing, the employer induced a large number of employees to shift from their current health insurance plan to a new health plan with a newly-formed subsidiary. Although the company promised that the new subsidiary’s health plan would pay the same health benefits, unbeknownst to these employees, that subsidiary was doomed to fail from the moment of its
Cofactor Infections and HIV Epidemics in Developing Countries: Implications for Treatment

Abstract This article shows that the burden of certain tropical disease infections, after controlling for other factors, is positively correlated with HIV prevalence. Using cross-national data and multivariate linear regression analysis, we investigate the determinants of HIV prevalence in low- and middle-income countries. We begin with social and economic variables used in other cross-national studies and then incorporate data on parasitic and infectious diseases endemic in poor populations, which are found to be strongly and significantly correlated with – and are potent predictors of – HIV prevalence. The paper concludes by arguing that treating tropical diseases may be a cost-effective add-on to HIV-prevention and -treatment programs, thus slowing the spread of HIV in disease-burdened populations.
Investor Sentiment, Accruals Anomaly, and Accruals Management

This study examines the effect of investor sentiment on the accruals anomaly. We find that for small stocks mispricing per unit of accruals is greater in high sentiment periods as compared with low...
Teaching Conflict Resolution: A Model for Student Research in Cyprus

Field-based experiential learning is an effective way to introduce alternative dispute resolution concepts. This article presents a model of field-based learning in Cyprus that integrates concepts of conflict resolution with real-world experiences. Through this process, students learn to assess the effectiveness of conflict resolution strategies and to research, analyze, and report on conflict processes and their resolution. Although the model is based on a course in Cyprus, the example and course model are applicable to other locations and other conflicts.
Is competition a cure for confusion? Evidence from the residential mortgage market

Using the National Survey of Mortgage Originations, we document that borrowers who are more financially sophisticated (measured by their self-reported understanding of the mortgage process) and more exposed to competition (measured by the number of lenders they considered) pay lower mortgage rate spreads. Yet competition is not a substitute for sophistication: the benefits of competition accrue to sophisticates as well as to naifs. Our results complement those from the literature detailing the limits of advice and education, and collectively they paint a pessimistic view about the prospects for simple interventions to close the mortgage rate gap between the informed and the naive.
Leapfrogging the Constitution: The Rise of State Takings Legislation

This article will examine the recent and potentially significant trend in state takings legislation. Part I will describe the development and current state of Supreme Court takings law. Part II will then survey current takings legislation, examining first assessment statutes and then compensation statutes. Finally, Part III will critique the state of takings statutes.
Erga Omnes Norms, Institutionalization, and Constitutionalism in International Law

Erga omnes norms are those that give third-party states, rather than just the victim, legal claims against states that violate them. This paper argues that ordinary twoparty norms arise when states recognize that a norm violation injures only one state and that other states that seek to retaliate on that state's behalf are likely using the violation as a pretext for predatory behavior. Erga omnes norms arise when states recognize that a norm violation injures multiple states and that states have an incentive to free ride rather than retaliate against the violator.
The dynamic power law model

I propose a new measure of common, time-varying tail risk for large cross sections of stock returns. Stock return tails are described by a power law in which the power law exponent is allowed to transition smoothly through time as a function of recent data. It is motivated by asset pricing theory and is estimable via quasi-maximum likelihood. Estimates indicate substantial time variation in stock return tails, and that the risk of extreme returns rises in weak economic conditions.
Emerging Strains in GCC Labor Markets

Unemployment pressures among nationals are emerging in the Cooperation Council for the Arab States of the Gulf (GCC) [1]. At a time when a rapidly growing number of young nationals are entering the labor force and governments are no longer able to act as employers of first and last resort, the non-oil sector continues to rely on expatriate labor to meet its labor requirements in most GCC countries. In this environment, policymakers face the related challenges of addressing unemployment pressures, while striking a balance between maintaining a liberal foreign labor policy and a reasonable level of competitiveness of the non-oil sector. Using a matching function framework, this paper examines labor market policies that are likely to expand the ability to hire nationals in the non-oil sector. It finds that an effective labor strategy should focus on strengthening investment in human capital, adopting institutional reforms, and promoting a vibrant non-oil economy.
Caesar As God's Banker: Using Germany's Church Tax As an Example of Non-Geographically Bounded Taxing Jurisdiction

This Article compares the modern-day German church tax to church taxes levied by the American colonies and early states and concludes that, unlike its American counterparts, the German church tax is not wholly a “church” tax. Rather, it is primarily a form of decentralized local taxation, the jurisdiction of which is determined by voluntary group affinity rather than geography. As such, it is a crucial part of the German taxing landscape that should not be abandoned but should instead be retained and extended to qualifying secular organizations. In that context - secular rather than sectarian - the tax may also serve as the starting point for developing a model of non-geographically bounded jurisdictions to be used for funding local government or non-profit provision of public goods within the United States.
Quantitative Easing, Collateral Constraints, and Financial Spillovers

The steady application of quantitative easing (QE) has been followed by big and nonmonotonic effects on international asset prices and capital flows. We rationalize these observations in a model in which a central bank buys domestic assets that serve as the best collateral for investors worldwide. The crucial insight is that domestic private agents adjust their portfolios of domestic and foreign assets in different ways to offset QE, conditional on whether they are (i) fully leveraged, (ii) partially leveraged, or (iii) unleveraged. These portfolio shifts can diminish or even reverse the impact of ever-larger QE interventions on asset prices.
Threats to the Future of the Immigration Class Action

The immigration class action, a form of action that litigants have used to achieve systematic reform, is under threat. This paper examines three threats to the immigration class action: (1) a general congressional willingness to restrict immigration judicial review; (2) the application of waivers of judicial review to immigration law and (3) legislative jurisdiction-stripping attacks more specific to the immigration class action. The general congressional willingness to strip immigration judicial review sets the atmosphere for proposals to require judicial review waivers as a condition of obtaining an immigration benefit and for jurisdiction-stripping legislation aimed more specifically at the class action. The identification and analysis of these threats links the immigration class action to efforts to limit other types of class actions. It initiates a discussion about the threat presented by judicial review waivers, including the collective action waiver, to immigration class actions. The government has argued that the relationship between itself and a foreign national sounds in contract and that a judicial review waiver is simply a term of the contract. This paper argues that using the contract analogy to justify immigration judicial review waivers simply stretches the analogy too far while raising serious constitutional questions about congressional power.
Time Varying Risk Aversion

Abstract Exploiting portfolio data and repeated surveys of an Italian bank's clients, we test whether investors’ risk aversion increases following the 2008 crisis. We find that, after the crisis, both qualitative and quantitative measures of risk aversion increase substantially and that affected individuals divest more stock. We investigate four explanations: changes in wealth, expected income, perceived probabilities, and emotion-based changes of the utility function. Our data are inconsistent with the first two channels, while they suggest that fear is a potential mechanism underlying financial decisions, whether by increasing the curvature of the utility function or the salience of negative outcomes.
Audit Partner Assignments and Audit Quality in the United States

ABSTRACT This paper examines the demand- and supply-side factors associated with audit partner selection and assignment in the United States. First, we examine whether audit partner gender and expe...