cssi/SciSciGPT-SciSciNet huggingface dataset:
Attractive Complexity: Tax Deregulation, the Check-the-Box Election and the Future of Tax Simplification

Political failure has long been the scapegoat for the increasing complexity of the income tax. Over the last few decades, confusion over the meaning of the term simplification appears to have become a second important obstacle to creating simpler tax laws. Because some tax complexity is attractive to taxpayers, relying on taxpayer preferences to identify complexity and to guide simplification efforts has produced reforms and proposals that promise simplification but instead deliver pro-taxpayer deregulation that may cause more of society's resources to be devoted to paying, minimizing and collecting taxes rather than less. The check-the-box election, which provided taxpayers with greater flexibility to choose and change the classification of business entities while having only an ambiguous impact on the tax law's complexity, offers a clear example of the misidentification of a deregulatory reform as a simplification reform. The simplification proposals offered by the bipartisan tax reform panel in 2005 would have done an equally poor job of simplifying the tax law. A rational taxpayer will always embrace a complex tax rule when its economic costs (e.g. $100 in time and legal fees) are more than offset by tax benefits the rule facilitates (e.g. $101 in tax savings). Although that rule's complexity is attractive to taxpayers, it still consumes $100 of society's resources. To prevent attractive complexity from transforming tax simplification into tax deregulation, it is important to adopt an objective approach to identifying and measuring complexity. Recognizing that rational taxpayers will sometimes prefer complexity over simplicity will help prevent attractive complexity from undermining the success of efforts to simplify the tax law.
Survival and Long-Run Dynamics with Heterogeneous Beliefs under Recursive Preferences

I analytically characterize the long-run behavior of an economy with two types of agents who differ in their beliefs and are endowed with homothetic recursive preferences. Agents with more incorrec...
RELATIVE VALUATION OF ALTERNATIVE METHODS OF TAX AVOIDANCE

ABSTRACT: This paper examines the relative valuation of alternative methods of tax avoidance. Prior studies find that firm value is positively associated with overall tax avoidance; I provide evidence that investors distinguish between methods of tax reduction in their valuation of tax avoidance. My analyses suggest that the impact of tax avoidance on firm value varies with tax risk, permanence of tax savings, tax planning costs, implicit taxes, and contrasts in disclosures of tax reduction in the financial statements. Tax avoidance resulting from stock option deductions is positively associated with firm value, accelerated depreciation is not associated with firm value, and deferral of residual U.S. tax on foreign earnings is negatively associated with firm value. The discount on tax avoidance generated by residual tax deferral is limited to firms with a presence in a tax haven and to tax avoidance revealed to investors through disclosure of the estimated residual tax.
Commercial Mortgage-backed Securities: Prepayment and Default *

One of the major developments in real estate finance during the 1990s was the emergence of a viable market for commercial mortgage backed securities. The growth in this market has spurred greater interest in empirical and theoretical research on commercial mortgage default and prepayment. We employ a competing risks model to examine the default and prepayment behavior of commercial loans underlying CMBS deals. We find that changes in the yield curve have a direct impact on the probability of mortgage termination. Furthermore, we do not find any statistical relationship between LTV and prepayment or default.
Reference-dependent valuations of risk: Why willingness-to-accept exceeds willingness-to-pay

The gap between willingness-to-pay (WTP) and willingness-to-accept (WTA) benefit values typifies situations in which reference points—and direction of movement from reference points—are consequential. Why WTA-WTP discrepancies arise is not well understood. We generalize models of reference dependence to identify separate reference dependence effects for increases and decreases in environmental health risk probabilities, for increases and decreases in costs, and reference dependence effects embodying the interaction of two changes. We estimate separate reference dependence effects for the four possible cost and health risk change combinations using data from our choice-based experiment for a nationally representative sample of 4,745 households. The WTA-WTP gap is due largely to the reference dependence effects related to costs. Standard models of reference dependence are not consistent with the results, as there is an interactive effect. Estimated income effects are under a penny and thus cannot account for higher values of WTA relative to WTP.
Municipal Interpretation of State Law as "Conscious Choice": Municipal Liability in State Law Enforcement

The Second Circuit case of Vives v. City of New York adopted the approach, shared by three other circuits, that a municipality is liable for enforcing an unconstitutional state statute only where the municipality has been mandated (rather than merely authorized) by state law to enforce the particular provision. The Second Circuit reasoned that where a municipality is required to enforce a state law, it makes no "conscious choice" to do so and therefore should not be liable under the Supreme Court's Monell doctrine for § 1983 municipal liability. This Comment argues further that even where a municipality is required by state law to enforce a state statute, the municipality should not escape liability if it chooses to enforce an unconstitutional *interpretation* of the statute where an alternative, constitutional interpretation is available under state law. The Comment explains how this conclusion follows naturally from the Supreme Court's § 1983 municipal liabilty doctrine, the tort principles that underlie § 1983, and states' sovereign authority to direct municipal actions.
Vote buying and campaign promises

Abstract What explains the wide variation across countries in the use of vote buying and policy promises during election campaigns? We address this question, and account for a number of stylized facts and apparent anomalies regarding vote buying, using a model in which parties cannot fully commit to campaign promises. We find that high vote buying is associated with frequent reneging on campaign promises, strong electoral competition, and high policy rents. Frequent reneging and low party competence reduce campaign promises. If vote buying can be financed out of public resources, incumbents buy more votes and enjoy an electoral advantage, but they also promise more public goods. Vote buying has distributional consequences: voters targeted with vote buying pre-election may receive no government benefits post-election. The results point to obstacles to the democratic transition from clientelist to programmatic forms of electoral competition: parties may not benefit electorally from institutions that increase commitment.
Level-n bounded rationality and dominated strategies in normal-form games

Abstract Dominated strategies play a crucial role in game theory and its solution concepts. While empirical studies confirm that humans generally avoid dominated strategies, they also suggest that humans seldom believe others will avoid such strategies. Hence, the iterated dominance solution is not likely to be a good predictor of one-shot behavior. We investigate how the salience of a dominated strategy affects the extent to which players believe that others will recognize and avoid it. Level- n theory serves as a useful tool in this empirical investigation, as it is able to classify behavior into levels of bounded rationality and provide clear statistical tests for model comparisons. We find that even the most obviously dominated strategies do not induce consistently significant behavioral differences in a variety of one-shot games. Nevertheless, the fit of the Level- n model can be improved by hypothesizing that the Level-0 choices and Level-1 beliefs are tilted slightly away from the uniform distribution to the extent that the average payoff of a strategy falls below a threshold.
Spatiotemporal Allocation of Advertising Budgets

Abstract This article develops a method for optimal allocation of resources based on an empirically validated model of how national and regional advertising generate sales over time. The authors derive the profit-maximizing total budget, its optimal split between national and regional spends, and its optimal allocation across multiple regions. They formulate a spatiotemporal model that accounts for spatial and serial dependence, spatial heterogeneity, neighborhood effects, and sales dynamics. Because of spatial and serial dependence, correlated multivariate Brownian motion drives the sales dynamics, resulting in a second-order differential equation for the Hamilton–Jacobi–Bellman (HJB) equation with multiple states (i.e., regional sales) and multiple controls (i.e., regional and national advertising expenditures). By solving the HJB equation analytically, the authors furnish closed-form expressions for the optimal total budget and its regional allocations. In addition, they develop a method to estimate th...
The Sins of Hosanna-Tabor

The Supreme Court has lost sight of individual religious freedom. In Hosanna-Tabor Evangelical Lutheran Church & School v. EEOC, the Court for the first time recognized the ministerial exception, a court-created doctrine that holds that the First Amendment requires the dismissal of many employment discrimination cases against religious employers. The Court ruled unanimously that Cheryl Perich, an elementary school teacher who was fired after she tried to return to school from disability leave, could not pursue an antidiscrimination lawsuit against her employer. This Article criticizes Hosanna-Tabor as a profound misinterpretation of the First Amendment. The Court mistakenly protected religious institutions’ religious freedom at the expense of their religious employees. Religious employees have been subjected to disabilities discrimination, sexual harassment, unequal pay, hostile work environments, age discrimination, pregnancy discrimination, gender discrimination, race discrimination, assault, retaliation, national origin discrimination, tortious interference with contract, blacklisting, intentional and negligent infliction of emotional distress, and breach of contract. Instead of having a day in court to win or lose their cases, they have been barred from litigation by the ministerial exception, a rule that always grants victory to the employer. This Article explains the flaws in Hosanna-Tabor’s reasoning and questions its presupposition that religious institutions are constitutionally entitled to disobey the law. It defends a neutral interpretation of the First Amendment over the Court’s favoritism toward religion and explains how the antidiscrimination laws can and should be applied to religious organizations.
The Culture of an Empire; The Structure of a Republic

This article argues that both major parties’ obsessive support of military adventures has reinforced the nation’s drift from republican virtues to an imperial overview. The hope is that the electoral process, which Madison saw as the essential structural component of republicanism, is the mechanism by which the nation becomes less aggressive.
Search for Molecular Gas in the Quasar SDSS 1044-0125 at z=5.73

We report upper limits on CO J = 2–1 and J = 5–4 emission from the quasar SDSSp J104433.04-012502.2, at z = 5.73, from observations made with the Berkeley-Illinois-Maryland Association array. Previously reported limits on CO J = 6–5 emission were obtained at z = 5.80, which is now thought to be off by 1%, and the observations likely missed the relevant redshifts for molecular gas. The new 3 σ upper limits on the line luminosities are L(2–1) < 5.1 × 1010 K km s-1 pc2 and L(5–4) < 3.0 × 1010 K km s-1 pc2, assuming 200 km s-1 line width. The CO J = 5–4 observations place an upper limit on warm, dense molecular gas mass comparable to amounts derived for some other high-redshift quasar systems from detections of this line. The limit on CO J = 2–1 emission suggests that excitation bias does not affect this conclusion. In addition, no companion galaxies rich in molecular gas are found in a ~1.4 Mpc field surrounding the quasar.
Social networks that matter: Twitter under the microscope

Scholars, advertisers and political activists see massive online social networks as a representation of social interactions that can be used to study the propagation of ideas, social bond dynamics and viral marketing, among others. But the linked structures of social networks do not reveal actual interactions among people. Scarcity of attention and the daily rythms of life and work makes people default to interacting with those few that matter and that reciprocate their attention. A study of social interactions within Twitter reveals that the driver of usage is a sparse and hidden network of connections underlying the “declared” set of friends and followers.
Justice Blackmun, Abortion, and the Myth of Medical Independence

This article uses Justice Blackmun's personal papers and other primary sources to argue for a re-interpretation of how the relationship between law and medicine affected the Supreme Court's treatment of abortion. The conventional wisdom has been that Blackmun framed the abortion right in Roe v Wade as belonging as much to the physician as to the pregnant woman largely because of his close personal identification with doctors, growing out of his experiences as resident counsel at the Mayo Clinic. I argue that this widely-held belief has hidden a richer and more complex relationship between legal and medical discourse. Both in Roe and in the earlier case of United States v. Vuitch, the Court constructed medicine as a mythically independent, parallel realm to the state. In the early abortion cases, the Court was engaged in a delegation of power, a move designed not so much to shield physicians from prosecution as to enlist them in regulation. Privileging Blackmun's authorship and thus tying Roe so closely to Blackmun overestimates his role in crafting the contours of the privacy right. In Roe, Justice Blackmun functioned in large part as a broker between Justice Douglas, who was as attracted as Blackmun to physician control, and Justice Brennan, who pressed for an autonomy framework that vested the right to decide solely in the woman. Blackmun's recently opened papers demonstrate that he was a moderating force among the Justices, seeking at every turn to narrow the decision while still commanding a court, an instinct that he also displayed in Vuitch. The conventional approach also underestimates Justice Blackmun, by reading Roe as fueled by a parochial allegiance to medical institutions. Blackmun did admire the professionalism that he had witnessed at Mayo, but he was pragmatic in his approach to adjudicating cases related to medical practice. He was also well aware that medicine was a business: the bulk of his time at Mayo was spent on tax, corporate, real estate, and licensing issues. After Roe, physicians providing abortions proved to be unreliable partners in the regulation of sexual and procreative norms because they eschewed the paternalistic role carved out for them. An increasingly conservative Court used cutbacks in deference to medical authority as a rhetorical mechanism for weakening the abortion right. This back and forth renegotiation of juridical and medical authority had a far more powerful impact than the influence of Justice Blackmun's years at Mayo.
Trends in hours: The U.S. from 1900 to 1950

Abstract During the first half of the 20th century the length of the workweek in the U.S. declined, and its distribution across wage deciles narrowed. The hypothesis is twofold. First, technological progress, through the rise in wages and the decreasing cost of recreation, made it possible for the average U.S. worker to afford more time off from work. Second, changes in the wage distribution explain the changes in the distribution of hours. A general equilibrium model is built to explore whether such mechanisms can quantitatively account for the observations. The model is calibrated to the U.S. economy in 1900. It predicts 82% of the observed decline in hours, and most of the contraction in their dispersion. The decline in the price of leisure goods accounts for 7% of the total decline in hours.
Social Influence and Entrepreneurship: The Effect of University Peers on Entrepreneurial Entry

Theories of entrepreneurship have proposed that entrepreneurs are shaped by contextual influences. This paper examines the social transmission of entrepreneurial behavior across university peers. I propose that peers acquainted at a university increase the probability of an entrepreneurial entry by transmitting information about new opportunities and by reducing the uncertainty associated with entrepreneurship. Based on unique data on hedge fund foundings between 1979 and 2006, this study documents that past entrepreneurial behaviors of university peers are an important driver of individual rates of entrepreneurship. Additional analyses show that social influence has a stronger effect on the transition to entrepreneurship when exerted by spatially proximate university peers and university peers who share gender with the focal individual. These findings provide evidence that the effect of university peers arises as a result of social influence rather than the institutional impact of universities. Together, the results uncover novel pathways of social transmission of entrepreneurship and strengthen evidence for the role of contextual influences in shaping entrepreneurial entry.
Currency substitution: The recent experience of Bolivia

Abstract One of the more puzzling aspects of Bolivia's economic performance since 1986 has been the rapid increase in the share of foreign currency deposits in the domestic banking system, that has occurred notwithstanding low inflation rates and a high degree of external stability. An analysis of the determinants of currency substitution in Bolivia shows that economic variables are statistically significant but have a fairly low explanatory power compared to variables that measure the degree of inertia in the currency substitution process. Hence, conventional fiscal and monetary measures may not be sufficient to reverse the process of currency substitution. This points toward an interesting asymmetry, where currency substitution increases rapidly with macroeconomic instability, but is difficult to reverse even after years of macroeconomic stability.
Environmental Impact Assessment as a Duty under International Law: The International Court of Justice Judgment on Pulp Mills on the River Uruguay

On April 20, 2010, the International Court of Justice (ICJ) announced its judgment in a dispute between Argentina and Uruguay concerning Uruguay’s authorization for pulp mills on the banks of the Uruguay River, which forms the international boundary between the two countries. This judgment is a significant step forward in the ICJ’s jurisprudence on environmental law and on shared watercourses. The Court recognized environmental impact assessment as a practice that has become an obligation of general international law in these situations.
Nothing But the Truth? Experiments on Adversarial Competition, Expert Testimony, and Decision Making

Many scholars debate whether a competition between experts in legal, political, or economic contexts elicits truthful information and, in turn, enables people to make informed decisions. Thus, we analyze experimentally the conditions under which competition between experts induces the experts to make truthful statements and enables jurors listening to these statements to improve their decisions. Our results demonstrate that, contrary to game theoretic predictions and contrary to critics of our adversarial legal system, competition induces enough truth telling to allow jurors to improve their decisions. Then, when we impose additional institutions (such as penalties for lying or the threat of verification) on the competing experts, we observe even larger improvements in the experts' propensity to tell the truth and in jurors' decisions. We find similar improvements when the competing experts are permitted to exchange reasons for why their statements may be correct.
When adding a fuel efficient car increases an automaker's CAFE penalty

We derive the conditions that cause an automaker's Corporate Average Fuel Economy (CAFE) fine to increase when it sells an additional, fuel efficient car. Raising the CAFE standards would broaden the range of fuel economies that produce this effect. Copyright © 2005 John Wiley & Sons, Ltd.
The Economic Worth of Celebrity Endorsers: An Event Study Analysis:

Celebrity endorsement has become a prevalent form of advertising in the United States. Despite extensive literature on the effects of celebrity endorsements on consumers’ brand attitudes and purcha...
The impact of operational decisions on the design of salesforce incentives

When facing high levels of overstock inventories, firms often push their salesforce to work harder than usual to attract more demand, and one way to achieve that is to offer attractive incentives. However, most research on the optimal design of salesforce incentives ignores this dependency and assumes that operational decisions of production/inventory management are separable from design of salesforce incentives. We investigate this dependency in the problem of joint salesforce incentive design and inventory/production control. We develop a dynamic Principal-Agent model with both Moral Hazard and Adverse Selection in which the principal is strategic and risk-neutral but the agent is myopic and risk-averse. We find the optimal joint incentive design and inventory control strategy, and demonstrate the impact of operational decisions on the design of a compensation package. The optimal strategy is characterized by a menu of inventory-dependent salesforce compensation contracts. We show that the optimal compensation package depends highly on the operational decisions; when inventory levels are high, (a) the firm offers a more attractive contract and (b) the contract is effective in inducing the salesforce to work harder than usual. In contrast, when inventory levels are low, the firm can offer a less attractive compensation package, but still expect the salesforce to work hard enough. In addition, we show that although the inventory/production management and the design of salesforce compensation package are highly correlated, information acquisition through contract design allows the firm to implement traditional inventory control policies: a market-based state-dependent policy (with a constant base-stock level when the inventory is low) that makes use of the extracted market condition from the agent is optimal. This work appears to be the first article on operations that addresses the important interplay between inventory/production control and salesforce compensation decisions in a dynamic setting. Our findings shed light on the effective integration of these two significant aspects for the successful operation of a firm. © 2014 Wiley Periodicals, Inc. Naval Research Logistics 61: 320–340, 2014
The Common Law as an Iterative Process: A Preliminary Inquiry

The common law often is casually referred to as an iterative process without much attention given to the detailed attributes such processes exhibit. This Article explores this characterization, uncovering how common law as an iterative process is one of endless repetition that is simultaneously stable and dynamic, self-similar but evolving, complex yet simple. These attributes constrain the systemic significance of judicial discretion and also confirm the wisdom of traditional approaches to studying and learning law. As an iterative system, common law exhibits what physicists call sensitive dependence on initial conditions. This generates a path dependency from which it may be hard to escape. Escape occurs through a second attribute of iterative processes, called self-similarity. Self-similarity in an iterative process exists when the output of one operation closely resembles the output in the next operation. Applications of an existing rule to new disputes bear that quality when disputes generated by the rule's initial conditions continue to be resolved in the same way. Non-self-similar applications of a rule involve departures from earlier formulations. When self-similarity dominates, the population of disputes cognizable under a rule is stable. Evolution and articulation of social norms promotes growth of non-self-similarity which threatens stability in the population of disputes. Such threats and path dependency created by initial conditions are overcome by what this Article calls judicial bifurcation, meaning a splintering of the input rule in a later dispute so that the population of disputes attracted by the population of rules regains stability. This produces a dominant systemic tendency towards stability in the population of disputes attracted by the population of rules. This systemic tendency puts limits on the systemic significance of judicial discretion. The fabric of the common law absorbs social norms, more than any idiosyncratic prejudices or tastes of particular judges. Importance of facts captured by sensitive dependence on initial conditions entails a substantial complexity in law that demands a close and careful reading of individual cases to understand law. Yet resulting systemic stability and influence of bifurcations reveal a systemic simplicity in the common law process, entailing also a need to study rhythms of case law dispute resolution.
Pot as Pretext: Marijuana, Race, and the New Disorder in New York City Street Policing

Although possession of small quantities of marijuana has been decriminalized in New York State since the late 1970s, arrests for marijuana possession in New York City have increased more than tenfold since the mid-1990s, and remain high more than 10 years later. This rise has been a notable component of the city's “Order Maintenance Policing” strategy, designed to aggressively target low-level offenses, usually through street interdictions known as “stop, question, and frisk” activity. We analyze data on 2.2 million stops and arrests carried out from 2004 to 2008, and identify significant racial disparities in the implementation of marijuana enforcement. These disparities, present in both stops and arrests, are robust to controls for social structure, local crime conditions, and stop levels more broadly. The racial imbalance in marijuana enforcement in black neighborhoods suggests a “doubling down” of street-level policing in places already subject to heightened scrutiny in the search for weapons, a link suggesting that the policing of marijuana may be a pretext in the search for guns. Despite these ties, however, we show no significant relationship between marijuana enforcement activity and the likelihood of seizing firearms or other weapons. We also show that a large proportion of marijuana enforcement lacks constitutional justification under either federal or New York law. Marijuana stops are more prevalent in precincts where “other” and “high-crime area” justifications are more likely to be reported, two factors that are constitutionally insufficient to justify a street stop. The racial skew, questionable constitutionality, and limited efficiency of marijuana enforcement in detecting serious crimes suggest that nonwhite New Yorkers bear a racial tax from contemporary policing strategy, a social cost not offset by any substantial observed benefits to public safety.
Timing Ability of Government Bond Fund Managers: Evidence from Portfolio Holdings

This study examines the ability of government bond fund managers to time the bond market, based on their monthly or quarterly holdings of Treasury securities during the 1997--2006 period. We find that, on average, government bond funds exhibit significantly positive timing ability at the one-month horizon under an unconditional holdings-based timing measure. However, our results indicate that managers' actions based on public information can explain the documented positive timing ability---namely, the average government bond fund has neutral or even slightly negative conditional market timing ability once public information is controlled for. Nonetheless, we find evidence that fund managers specializing in Treasury securities can better interpret public information than general government bond fund managers do. This paper was accepted by Wei Xiong, finance.
Holdings Data, Security Returns, and the Selection of Superior Mutual Funds

In this paper we show that selecting mutual funds using alpha computed from a fund’s holdings and security betas produces better future alphas than selecting funds using alpha computed from a time-series regression on fund returns. This is true whether future alphas are computed using holdings and security betas or a time-series regression on fund returns. Furthermore, we show that the more frequently the holdings data are available, the greater the benefit. This has major implications for the Securities and Exchange Commission’s recent ruling on the frequency of holdings disclosure and the information plan sponsors should collect from portfolio managers. We also explore the effect of conditioning betas on macroeconomic variables as suggested by Ferson and Schadt (1996) to identify superior-performing mutual funds as well as the alternative way of employing holdings data proposed by Grinblatt and Titman (1993).
Innovative healthcare delivery

Abstract Critics of the American healthcare system recite a long list of problems, including rising out-of-pocket costs, inconvenient access, overuse of emergency departments, uncoordinated medical records, and declining numbers of primary care doctors. To address these issues, some new venues have evolved, such as retail and urgent care clinics; however, the emergency department has become the only service provider available to all patients on a 24/7 basis. It is time to reinvent the system. The concept of patient-centered medical homes offers a structure for integrating innovations that can transform the delivery of healthcare. In this model, each patient develops an ongoing relationship with a primary care physician supported by a team of caregivers. An integral feature is the electronic medical record, which facilitates coordinated communication and decisions. Access expands beyond the traditional physician office visit to satellite services tailored to individual needs. Services center on whole-person care, including wellness and preventive counseling, as well as acute and chronic care. Adoption of the patient-centered medical home transforms healthcare delivery into a system that benefits everyone.
Efficiency in estimation of memory

Abstract We study the efficiency of semiparametric estimates of memory parameter. We propose a class of shift invariant tapers of order (p,q). For a fixed p, the variance inflation factor of the new tapers approaches 1 as q goes to infinity. We show that for d ∈ ( − 1 / 2 , p + 1 / 2 ) , the proposed tapered Gaussian semiparametric estimator has the same limiting distribution as the nontapered version for d ∈ ( − 1 / 2 , 1 / 2 ) . The new estimator is mean and polynomial trend invariant, and is computationally advantageous in comparison to the recently proposed exact local Whittle estimator. The simulation study shows that our estimator has comparable or better mean squared error in finite samples for a variety of models.
Inefficiency in Earnings Forecasts: Experimental Evidence of Reactions to Positive vs. Negative Information

Prior archival studies of analysts' forecasts have found evidence for systematic underreaction, systematic overreaction, and systematic optimism bias. Easterwood and Nutt (1999) attempt to reconcile the conflicting evidence by testing the robustness of Abarbanell and Bernard's (1992) underreaction results to the nature of the information. Consistent with systematic optimism, forecasts are found to underreact to negative earnings information but overreact to positive information. However, Easterwood and Nutt are unable to distinguish between misreaction caused by incentives unique to analysts with misreaction caused by human decision bias that may be typical of investors. We address this issue by analyzing forecast reactions to positive versus negative information in the controlled experimental setting of Gillette, Stevens, Watts, and Williams (1999). The forecast data reveal systematic underreaction to both positive and negative information, and the underreaction is generally greater for positive information than negative information. This suggests that prior empirical evidence of forecast overreaction to positive information is unlikely to be attributable to human decision bias.
"Transforming" the Debate: Why We Need to Include Transgender Rights in the Struggles for Sex and Sexual Orientation Equality

In this Essay, Taylor Flynn observes that sex and sexual orientation equality jurisprudence is premised upon the traditional understanding of "sex" as determined by anatomy at birth. The presumption typically followingfrom this reduction of sex to anatomy is the notion that certain gendered attributes are inherent in biological maleorfemaleness. Professor Flynn asserts that these erroneous and unduly narrow views significantly hamper courts' ability to address the core of sex and sexual orientation discrimination-hostility based on failure to conform to conventional gender norms. Surveying workplace, public accommodation, asylum, marriage, and custody cases, Flynn explains how conventional jurisprudence fails a wide array of persons. Looking to the burgeoning transgender case law, Professor Flynn demonstrates how individuals ranging from working women, gay men and lesbians, and stay-at-home dads can benefit from a jurisprudence that adopts more accurate and multifaceted understandings of sex and gender.
We Can Do Better

I want to work toward answers to two very hard questions. Here is the first: How do we avoid essentialist or stereotyped conceptions of women and men while holding to the possibility that women have the insight and inclination to transform the practice of law? I take as given the need to expose and resist stereotypes that constrain us as women and men-to deny the essentialist claims that women but not men are nurturing, that men but not women are quantitatively apt, that women are inconsistent and inconstant, while men are logical and true. I acknowledge that there are times when "Anything You Can Do, I Can Do Better" is a healthy song to sing. At the same time, I believe that the presence of women in formerly all male centers of influence can and should transform practice within those institutions. (The words "can" and "should" are carefully chosen; I do not believe that transformation is an automatic consequence of integration.) How can we reconcile the claim of similar capacities with the promise of transformation?
Long-run and short-run determinants of sovereign bond yields in advanced economies

Abstract We analyze determinants of sovereign bond yields in 22 advanced economies over the 1980–2010 period using panel cointegration techniques. The application of the cointegration methodology allows distinguishing between long-run (debt-to-GDP ratio, potential growth) and short-run (inflation, short-term interest rates, etc.) determinants of sovereign borrowing costs. We find that in the long run, government bond yields increase by about 2 basis points in response to a 1 percentage point increase in government debt-to-GDP ratio and by about 45 basis points in response to a 1 percentage point increase in the potential growth rate. In the short run, sovereign bond yields deviate from the level determined by the long-run fundamentals, but about half of the deviation adjusts in one year. When considering the impact of the global financial crisis on sovereign borrowing costs in euro area countries, the estimations suggest that spreads against Germany in some European periphery countries exceeded the level determined by fundamentals in the aftermath of the crisis, while some North European countries have benefited from “safe-haven” flows.
Justice Scalia and the Religion Clauses: A Comment on Professor Epps

This Comment was written in response to an article by Garrett Epps (Oregon) for a conference at Washington University-St. Louis on the Rehnquist Court and the First Amendment. Epps's lead article criticizes the Court's moderate/conservative majority as a separationist: the Court majority took too far divisive opinions Justice Scalia holds about religion and public life. The Comment provides a religionist response: Epps makes novel insights about Justice Scalia, but the Rehnquist Court did not threaten the separationist commitments in religion case law nearly as much as Epps suggests, and in any case a healthy republican community needs religion in its public square. The Comment may be of general interest for three reasons. First, using original sources, it restates concisely the religionist case for accommodating religion into civil and political life. Second, it uses the the religion cases to consider whether Justice Scalia prefers originalism for its own sake or as a means to promote other policy values, particularly judicial restraint and democratic majoritarianism. Finally, the religion cases help correct leading retrospective portraits of the Rehnquist Court. These cases reveal important commitments, both interpretive and substantive, that influenced Justices Kennedy and O'Connor to ally with or abandon the Rehnquist Court's most conservative Justices.
Islamic Commercial Law and Social Justice: Shari'ah-Compliant Companies, Workers' Rights, and the Living Wage

The purpose of this article is to examine workers’ rights under Islamic law. The Shari’ah-based financing, investing and related industries establish their businesses on claims that they comply with the Shari’ah’s mandates for commercial practices. They focus almost exclusively on the prohibitions on interest, excessive risk and avoidance of dealing with prohibited products and services. However, companies claiming to be in compliance with the Islamic Shari’ah must look beyond the forms of the transactions or the content of the products they sell. The companies and their Shari’ah advisors must also examine the treatment of the workers employed by the companies. As this article will show, the fair treatment of workers is clearly relevant to the analysis of whether a company is Shari’ah compliant. The Qu’ran, the teachings of the Prophet (P.B.U.H.), and the writings of the scholars are replete with instructions regarding the fair treatment of workers. If the workers are not being treated fairly in accordance with Islamic law, the owners of these companies and their Shari’ah advisors should not claim that the companies and products are Shari’ah compliant. This article begins with a case study of janitors working in a building in Indiana that houses one of the offices of a large international company that claims to be conducting its business in accordance with Shari’ah. However, the janitors were being paid less than a living wage. This author argues that under Shari’ah, this practice amounts to the exploitation of the workers and that any company that pays less than a living wage, or benefits from these low wages should not claim to be Shari’ah compliant. Part I of the article gives the reader an overview of the Shari’ah compliant industries and the sources of fiqh (jurisprudence) that are generally relied upon to guarantee Shari’ah compliance. Part III explores the intersection of Islamic commercial law, religious duty and business ethics. Part IV argues based on both classical and contemporary sources of fiqh that the Shari’ah clearly requires the fair treatment of workers. Part V suggests strategies for the implementation and standardization of Shari’ah compliance that would include the fair treatment of workers through requiring those companies that claim to be Shari’ah compliant to pay workers a living wage. The article includes a fatwa issued by Dr. Muzammil Siddiqi, President of the Fiqh Council of North America (2006) which supports the author’s arguments.
CONSENT SEARCHES AND FOURTH AMENDMENT REASONABLENESS

This Article builds on a growing body of scholarship discussing the role of reasonableness in consent-search doctrine. Although the language of “voluntary consent” implies a subjective inquiry into the state of mind of the person granting consent, the U.S. Supreme Court has repeatedly injected an objective standard of reasonableness into its analysis of a citizen’s consent. Several scholars have characterized the Court’s consent jurisprudence as focusing not on true voluntariness but on the reasonableness of police conduct, which they argue is appropriate because the touchstone of the Fourth Amendment is “reasonableness.” While the renewed scholarly focus on the role of reasonableness in the Court’s consent jurisprudence is helpful in explaining the puzzling disconnect between language and doctrine, much of this current emphasis has been distorted by the dichotomy between coercion and voluntariness: Did police use (unreasonable) coercive tactics that would override a (reasonable) person’s free will? However, the Fourth Amendment’s default concept of reasonableness is based not on coercion or volition but on its requirement of a warrant based on probable cause. Typically when the Court recognizes an exception to the default rule, it grounds that exception in a concept of reasonableness that requires a weighing of the governmental interests served by the warrantless conduct against the level of the intrusion on affected Fourth Amendment interests: liberty and privacy. Because the Court has relied on the myth of voluntary consent as a proxy for the warrant and probable cause requirements that normally define “reasonableness” in the Fourth Amendment context, the Court has bypassed the usual substitute proxy for Fourth Amendment reasonableness: an express weighing of the governmental and citizen interests at stake. This Article engages in the reasonableness inquiry that the Supreme Court has avoided. Drawing on the Court’s approach to reasonableness in other Fourth Amendment contexts, this Article first looks to the concept of “macro reasonableness” to argue that the Court has overestimated the value of consensual searches to law enforcement and underestimated their effect on privacy. While the Court has emphasized the value of consensual searches yielding incriminatory evidence that might go
A Transformative Theory of Religious Freedom: Promoting the Reasons for Rights

Religious freedom is often thought to protect, not only religious practices, but also the underlying religious beliefs of citizens. But what should be said about religious beliefs that oppose religious freedom itself or that deny the concept of equal citizenship? The author argues here that such beliefs, while protected against coercive sanction, are rightly subject to attempts at transformation by the state in its expressive capacities. Transformation is entailed by a commitment to publicizing the reasons and principles that justify the basic rights of citizens.
Treaty Interpretation and the False Sirens of Delegation

This piece follows on earlier work, "Politics as Laws?: The ABM Treaty, the Separation of Powers, and Treaty Interpretation", which addressed the constitutional issues arising from the allocation of authority between the President and the federal courts concerning the interpretation of treaties. It addresses a response to "Politics as Laws" by Professor Michael Van Alstine, who argues that courts should have the primary role in interpreting certain types of treaties, specifically those that create domestic rights of action. He argues that treaties can "delegate" to the federal courts a law-making power to fill in gaps in treaties, and that the courts should interpret certain types of international agreements in harmony with the courts of other nations. Several significant problems pervade this approach to treaty interpretation. It transplants the most expansive theories of the federal judiciary's role in lawmaking into the treaty context without regard to the problems this creates for the separation of powers. Because treaties centrally involve foreign affairs, the text and structure of the Constitution are better read as vesting the authority to interpret treaties in the President. The separation of powers and federalism require a clear distinction between treaties and statutes, and there is no compelling reason, rooted in the text, structure, or history of the Constitution, for erasing that textual barrier. Giving courts the paramount role in interpreting treaties runs counter to the original understanding of the Constitution and modern jurisprudence concerning the scope and nature of the judicial power. Finally, theories about delegating interpretive authority to international or foreign courts are problematic due to the Constitution's vesting of federal power solely in the federal government.
Optimal regulation of pollution with stochastic exposure, acute damages, and chronic damages

Epidemiologists have documented both acute short-term and chronic long-term damages associated with exposure to air pollution, while atmospheric scientists have demonstrated that air pollution exposure depends on stochastic meteorological conditions. We analyze the implications of these features for the optimal regulation of pollution emissions. Our model incorporates abatement costs, separate acute and chronic damage components, and stochastic pollution exposure. We characterize the optimal path of pollution regulation and total expected costs under three different scenarios regarding the regulator's ability to update policy and forecast meteorological conditions. We also present a numerical example of sulfur dioxide emissions and small particulate matter concentrations from electric power plants in northeast Ohio. In the example, dynamic updating of regulation provides significantly more benefits when combined with accurate forecasts of current meteorological conditions.
Fighting Discrimination While Fighting Litigation: A Tale of Two Supreme Courts

The U.S. Supreme Court has issued an odd mix of pro-plaintiff and prodefendant employment law rulings. It has disallowed harassment lawsuits against employers even with failed antiharassment efforts, construed statutes of limitations narrowly to bar suits about ongoing promotion and pay discrimination, and denied protection to public employee internal complaints. Yet the same Court has issued significant unanimous rulings easing discrimination plaintiffs’ burdens of proof. This jurisprudence is often miscast in simple pro-plaintiff or prodefendant terms. The Court’s duality traces to its inconsistent and unaware adoption of competing policy arguments:
Inconsistency in Welfare Inferences from Distance Variables in Hedonic Regressions

In hedonic analysis, a common approach for eliciting information regarding the welfare significance of some landmark or (dis)amenity is to control for its distance from each observation. Unfortunately, the effects of distances to amenities on housing prices are generally not consistent indicators of the true price impact of that amenity. Instead these variables serve as proxies for the relative position of every observation in space. Whenever a household considers more than two landmarks in a housing purchase, distance variable parameter estimates are simply the best linear fitted weights for that multiple criteria location decision. Simulations illustrate extreme sensitivity in parameter estimates to the researcher’s choice of landmarks. One strategy models the location of each observation directly instead of its distances to amenities. Using the quadratic controls of longitude and latitude controls for location effects on price to assure unbiased estimates of non-distance variable regressors.