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Category: Psychology and Behavior

Why did our subjects sometimes behave like 19th century legal formalists, and other times like realists from the Wisconsin School of relational contract theory?

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Intuitions About Contract Formation

Tess Wilkinson-Ryan and I have a new paper up on SSRN, titled Intuitions About Contract Formation.  In the great Redyip tradition, I thought I’d blog about it. From the abstract:

Legally, much depends on the moment that a negotiation becomes a deal.  Unlike torts or civil procedure or any area of public law, the laws of  promissory exchange only apply to parties who have manifested their assent to be bound. Even so, the moral norms of exchange and promise are quite firmly  entrenched and more broadly applicable than just legal contracts. Norms of promise-keeping and reciprocity, interpersonal courtesy, community reputation—these kinds of intangible goods have real effects on contract behavior. For this reason it is especially surprising that intuitions about formation have gotten so little attention from legal and behavioral scholars. This paper offers five new empirical studies of commonsense approaches to contract formation. The first section of this Article surveys intuitions about what the law of formation is. In a world in which the vast majority of contracts are signed without the advice of counsel, most people have to draw inferences based on their background knowledge and beliefs. It turns out that the colloquial understanding of contract formation is about the formalization of an agreement rather than actual assent.

In the second part of the Article, we tease out the intuitive relationship between formation and obligation. The law of contracts is very clear that  parties’ obligations to one another turn entirely on whether or not they have mutually manifested assent to be bound. And, in fact, we find that behavioral results suggest that legal (or legalistic) formation does enhance commitment to a deal irrespective of its power to impose sanctions; it seems that the law has freestanding normative force. However, we also find that the subjective sense of obligation is not as black or white as the law would predict. Parties are influenced by the natural, informal obligations to one another that build over the course of a transaction, increasing their commitment to the partnership in stages rather than all at once at the moment of formation.

To set the paper up a bit, Tess and I had previously found that when subjects are told they are in legally binding contracts, they lower their guard against exploitation & treat contracting parties like partners.  This raised a question that Intuitions tries to answer:  what are subjects’ naive views about formation?  We show that they differ systematically from the operative doctrinal rules, which creates a window for exploitation — when consumers believe themselves to be in contracts but aren’t. For example, individuals think that payment is contract, not agreement.  In one experiment, for example, we asked:

“Peter is ordering new custom speakers from Audionuts, a mail-order sound system retailer. Peter calls the company and speaks at length to a customer service representative, hashing out the details of his order, which include speakers for his main media unit (TV and stereo system) as well as his portable devices (phone and iPad). Peter and the customer service representative arrive at a final product specification, including a price and delivery date. Peter gives the rep his credit card number, and the charge is immediately posted to his account. Eight days later, Peter receives his speakers in the mail. Inside the box is a piece of paper headed “Terms and Conditions.” The Terms and Conditions sheet includes information about the duration of the warranty (90 days), the dispute resolution process (mandatory arbitration) and the return policy (return within 14 days for full refund for any reason). The Terms and Conditions sheet states at the bottom, “If you do not agree to these terms and conditions, please return the product within 14 days for a full refund.” Peter uses the speakers with no problems for two months.”

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Note: payment & acceptance without return dominate over the oral agreement, or reading terms.  (Other experiments replicate this finding on payment, and expand it to signature.)

At the same time, we find that, in the absence of information about law or legal rules, individuals tend to begin to act like partners significantly earlier than the moment where they’ve concluded a deal.  Indeed, a mere offer appears to motivate feelings of reciprocity by the offeree. Why did our subjects sometimes behave like 19th century legal formalists, and other times like realists from the Wisconsin School of relational contract theory? Our tentative conclusion is that subjects themselves draw a distinction between legal and moral obligations. They view their legal obligations as heavily dependent on formal manifestation of assent via signature. But their moral obligations are attendant to both legal formalism and also to more fine-grained moral norms. This is an interesting case in which we see some evidence of a legal context, contract, in which moral norms are not entirely determined by legal norms. But when subjects are told that they are in a contract, in a sense it makes it so.

 

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Neurocriminology: The Monsters are in the Molecules

Is the brain indeed the prime suspect when it comes to horrific crimes? Does our molecular structure or DNA determine our destiny, for the benevolent best or the malovent worst?

Such questions and others are explored in Dr. Adrian Raine’s book titled The Anatomy of Violence: The Biological Roots of Crime (Pantheon, 2013). This mind-opening book by a University of Pennsylvania professor of psychiatry and chairman of the department of criminology is the focus of an online symposium just posted on the Washington Independent Review of Books Gb4yObYARcACwebsite.

To help flesh out some of the instructive and provocative points raised in Dr. Raine’s illuminating book, NYU professor of Clinical Psychiatry Laurence R. Tancredi (who holds MD and JD degrees) and a University of Minnesota law professor Francis Shen (who specializes in neuroscience and the law) wrote commentaries. In the spirit of a free exchange of ideas, Dr. Raine authored a reply. I wrote the foreword to the symposium.

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UCLA Discourse: Trayvon Martin & Implicit Bias

Vol. 61, Discourse

The killing of Trayvon Martin in 2012 and recent verdict in the trial of George Zimmerman has generated intense national debate.  Mr. Zimmerman’s verdict has not ended the discussion, but instead caused of a firestorm of conversation in the national media.

In light of this debate, we offer a 2012 essay published by two UCLA Law alums discussing the concept of implicit bias and its relationship with gun violence.  The essay remains timely event a year after its publication, and can be found here.

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Warren Buffett’s Single Bid Rule

Among the many ways that Warren Buffett is unusual is his approach to the role of price in business acquisition negotiations. Other people commonly haggle over price. Tactics include sellers naming an asking price that is higher than warranted or buyers making a low-ball bid. Some people enjoy the give and take and many believe it is a way to produce value in exchange.

Buffett eschews such exercises as a waste of time. One of Berkshire’s acquisition criteria (in addition to size, proven earnings power, quality management in place and relative simplicity of the business) is having a price. Eschewing the games so many negotiators like to play over ranges of values, Buffett wants a single price at which each side can say yes—or walk away. His bid is his bid; when he gives you a bid, what you have is what most people classify as the “best price,” “final offer,” or “highest bid.”

Buffett has repeatedly statesd this policy, along with the other acquisition criteria, in every Berkshire Hathaway annual report since 1983 (and once in a 1986 ad in the Wall Street Journal). Yet I know many people who are skeptical about whether Buffett and Berkshire actually adhere to this policy—doesn’t he engage in price negotiations in at least some cases, they ask? Aren’t there situations in which the value of an exchange is not discovered other than through the dynamic of negotiations, including about appropriate methodology?

To answer such questions, I examined the 16 Berkshire Hathaway acquisitions over the past two decades that involved public company targets. Unlike private company targets, those companies are required by U.S. federal law to publicly disclose the background of the transaction, including negotiation over all material terms, such as price. Read More

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Why States Should Ban Adolescent Driving (cont’d)

My previous post argues for raising the driving age, ideally to 18. Thank you to those who commented. You raise many good points, so I continue the conversation here. (And I must especially thank Prof. Cunningham for reading my article, and for his kind words.)

Treating Teens as Presumptively Delinquent? One comment suggests that raising the driving age treats young people as “presumptive law breakers.” I resist that characterization. Raising the driving age recognizes adolescent incapacity in this context and aims to protect adolescents, and those with whom they share the roadways, from the too-often tragic consequences of that incapacity. Such policy reform is consistent with the state’s obligations to its young people. I briefly discuss those general obligations, then return to the driving context specifically.

The State’s Obligations to Adolescents, Generally. The state should safeguard both the welfare interests and autonomy interests of the young. (I elaborate on this state obligation elsewhere, drawing on the work of my colleague James Dwyer and others.) Welfare interests pertain to young people’s well-being, irrespective of any affirmative choice they make. Autonomy interests refer to their interests in making self-determining choices and having the freedom to exercise the liberties of which they are capable. Compelling evidence suggests that driving is a liberty that adolescents do not have the capacity to exercise competently. The state thus fails to guard adolescents’ welfare interests — and protect them from their deficiencies — by extending them this liberty despite their incapacity.

Policymaking affecting adolescents in general poses a major challenge for lawmakers. Young people attain different capacities at different stages in their development, and development correlates predictably (though not perfectly) with age. Identifying and extending to adolescents liberties in contexts in which they have attained competence can be a challenge. Further complicating the state’s task is that, even where adolescents may have achieved the ability to perform competently, certain real-world contexts predictably confound their capacities and impede their performance. Thus by mid-adolescence, individuals have reached adult-like information-processing and logical reasoning abilities. But the quality of their decision making suffers in situations that require adolescents to quickly assess and react to risk, to reason while highly stressed or in the heat of passion, to make decisions in unfamiliar circumstances, or to act in the presence/under the pressure of peers. The neurobiological processes that support decision making under these conditions do not fully mature until late adolescence or early adulthood.

Prof. Cunningham’s analogy to rules that allow minors to disclaim contracts is a good example of a policy choice that may be at odds with what we now know about adolescent decision-making capacity. (I discuss adolescent contractual capacity briefly in another article (at pp. 1851-57, which argues against adolescent marriage.) By mid-adolescence, individuals have the cognitive capacity to understand the rights, duties, and responsibilities of a contract, and in light of that understanding, are able to make a voluntary choice to enter it or not. Absent the same factors that would invalidate a contract entered by an adult (duress, etc.), there is a strong argument that the adolescent should be held to his or her bargain. But contract policy might also permit minors to disclaim contracts entered in the sorts of contexts likely to compromise their decision making (e.g., the typically pressured context of buying a used car?).

Back to adolescent driving:

How Serious a Public Health Threat? One commenter (SgtDad) notes that traffic fatalities have declined in recent decades, making adolescent driving an “ever smaller problem,” with policy changes in turn having an “ever smaller effect.” To what extent does adolescent driving remain a true public health problem? An estimated 48 thousand 16- to 19-year-olds will die in car crashes

Read More

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Why States Should Ban Adolescent Driving

Car crashes kill more teens each year than any other cause; and of the crashes in which they are involved, teens are overwhelmingly at fault. Decades of law-reform efforts have led to mandatory seatbelt laws, an increased legal drinking age, and graduated-licensing systems. Yet traffic fatalities still account for nearly 40% of all deaths of 16- to 19-year-olds. Driving, then, is arguably the greatest public health threat facing U.S. teens. (The next three leading causes of teen death — homicides, suicides, and cancer-related illness — trail only distantly.) While existing measures have had some positive effects, they insufficiently safeguard both young drivers and the public at large from young drivers’ immaturity and inexperience. A report of a National Academies interdisciplinary workshop, for example, concluded that “the sheer magnitude of the injuries and fatalities that continue to result from teen crashes shows that current prevention efforts are inadequate.”

Most of us know that teens crash at rates far higher than those of older drivers. Fewer may be aware that the younger the teen driver, the higher the risk — by far the highest crash rates are those of 16-year-olds (250% higher than those of 18-year-olds), followed by those of 17-year-olds (50% higher than those of 18-year-olds). Driving inexperience and developmental immaturity are the primary factors that contribute to adolescent crash risk. Driving inexperience, however, is not the primary cause of the higher crash risk of younger teens. At younger ages (15 to 17), driving inexperience is secondary to developmental immaturity; not until later ages do different levels of driving experience account for more of the differences in crash rates. Thus the crash risk for 15-year-old beginners is much higher than that for 17-year-old beginners, but the crash risk for 18-year-old beginners is only slightly higher than that for 20-year-old beginners. At each month of driving experience, young drivers crash at rates higher than those of older drivers with equal driving experience.

By ages 15 or 16, adolescents indeed have the cognitive ability required to learn traffic rules and basic driving skills. But the self-regulatory capacities and psychosocial maturity essential to competent and safe driving remain immature in adolescence (the developmental stage between childhood and adulthood, generally spanning ages 12 to 17), as observed in research of adolescent behavior generally and driving behavior specifically, and supported by research of the adolescent brain. When decision-making contexts involve stressors that require the exercise of psychosocial maturity/regulatory competence — requiring, for example, that a decision be made in an unfamiliar situation (such as the new perceptual situations involved in driving); under time pressure (such as the nearly-instantaneous reactions often required when reacting to driving hazards); in in the presence/under the influence of peers (including the direct or perceived influence of peer passengers); or in an emotionally-charged situation — adolescent decision making suffers. These characteristics all confound the execution of whatever nascent driving competence adolescents do possess.

Read More

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The Annoying “Riiiiiight” in Faculty Workshops

Imagine law professor Felix Cohen giving a law faculty workshop of his famous 1935 paper, Transcendental Nonsense and the Functional Approach (here), addressing the topic of personal jurisdiction over corporations.  But pretend he is presenting the paper to a faculty today, in 2012, and tune your hear to the sound of the words he might utter when explaining his argument to those assembled.  If he followed the common gluey talk of fancy law professors today, it might be transcribed as follows:

The question of where a corporation is, right, when it incorporates in one state and has agents transacting corporate business in another state, right, cannot be answered by empirical observation, right. Nor is it a question that demands for its solution any analysis of political considerations or social ideals, right.

It is a question identical in metaphysical status, right, with the question scholastic theologians are supposed to have argued at great length, “How many angels can stand on the point of a needle?”, right.  Now it is extremely doubtful whether the scholastics actually discussed this question, right. Yet the question has become, for us, a symbol of an age in which thought without roots in reality, right, was an object of high esteem.

Will future historians, right, deal more charitably with such legal questions as “Where is a corporation?” Nobody has ever seen a corporation, right. Some of us have seen corporate funds, corporate transactions, etc., right. But this does not justify assuming that the corporation travels about from State to State as mortal men travel, right.

Yet it is exactly in these terms of transcendental nonsense, right, that the Court of Appeals approached the question of whether the Susquehanna Coal Company could be sued in New York State. “The essential thing,” said Judge Cardozo, writing for a unanimous court, right, “is that the corporation shall have come into the State.” Why this journey is essential, right, or how it is possible, we are not informed.

The opinion notes that the corporation has an office in the state, right, with eight salesmen and eleven desks, and concludes that the corporation is really “in,” right, New York State. From this inference it easily follows, right, that since a person who is in New York can be sued here, right, and since a corporation is a person, right, the Susquehanna Coal Company is subject to suit in a New York court, right.

The much-maligned “you know” would be as productive as “right” in this transcript. You rarely hear law professors insert that phrase in their speech. Too polished for that. Yet they pepper their sentences with the annoying right, usually pronounced riiiiiight, with the lilt of a rhetorical question. A lamentable institutional habit.

UPDATE IN REPLY TO THE KIND COMMENT OF EDWARD CANTU: We  had a post and conversation about So here at Co-Op, which can be viewed here.

 

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Trusted Sources

Dan Kahan has a really useful post up on the Cultural Cognition blog on whether motivated cognition (and cultural cognition) is a cognitive bias in need of debiasing through law. Dan situates his comments in the context of science communication:

“The amount of information it is useful for any individual to accept as true is gazillions of times larger the amount she can herself establish as true by valid and reliable methods (even if she cheats and takes the Royal Society’s word for it that science’s methods for ascertaining what’s true are the only valid and reliable ones).  Scientists, like everyone else, are able to know what is known to science only by taking others’ words for it.  There’s no way around this. It is a consequence of our being individuals, each with his or her own separate brain . . . .”

The point generalizes: we are required to learn about most complex systems and events though intermediaries.  It makes sense – it is both efficient and useful – to rely on intermediaries who will see as salient those particular pieces of information that we ourselves are disposed to want to highlight. Cultural cognition describes this “biased” assimilation process, but isn’t itself an error of thought.

The problem that results is that having trusted particular sources (and consequent worldviews), we become less able to see what others’ see.  We are thus led to believe that others are biased, while we remain dispassionate observers. Can’t they see what we see?  Why are they so politicized?  As Orin Kerr snarks in one of our recent comment threads:

“When my side wins, it is a triumph of reason; when the other side wins, our reason is outnumbered by their mere exercises of power.”

(He’s made similar points before – but this comment thread had to do with the healthcare decision, and I’m trying to optimize our google search rank by mentioning the Supreme Court’s decision coming tomorrow in a post entirely about something else.)

Cultural cognition isn’t a bias, but it does create a collective action problem.  It’s the job of policymakers – and intellectuals with time on their hands – to try to work out a public solution. To be concrete, the Supreme Court, whatever it does tomorrow, could help by writing opinions that didn’t so obviously work to cater to our worst passions.

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The Debiasing Effect of Legalisms

This is a nice result:

“Would you make the same decisions in a foreign language as you would in your native tongue? It may be intuitive that people would make the same choices regardless of the language they are using, or that the difficulty of using a foreign language would make decisions less systematic. We discovered, however, that the opposite is true: Using a foreign language reduces decision-making biases. Four experiments show that the framing effect disappears when choices are presented in a foreign tongue. Whereas people were risk averse for gains and risk seeking for losses when choices were presented in their native tongue, they were not influenced by this framing manipulation in a foreign language. Two additional experiments show that using a foreign language reduces loss aversion, increasing the acceptance of both hypothetical and real bets with positive expected value. We propose that these effects arise because a foreign language provides greater cognitive and emotional distance than a native tongue does.”

It made me wonder whether the law’s anachronistic use of latin helps lawyers, laypeople and judges by debiasing them. If so, I’d find the result especially ironic as I generally ask students to avoid latin on exams.  I’ve always explained that the law’s latin phrases obscure thought and are often wrongly employed.  Arguendo is a particular target of my irritation.  But if it turns out that forcing people to read latin in a jury instruction – scienter, or guardian ad litem – makes them better decisionmakers, it would imply that I’m actually removing an important tool in students’ exam-taking box!  The result would also be cool for various other reasons, including as a way to think about the project of judicial debiasing.

This is testable – I’m thinking I just found another summer project.  As a pretest, you could help by telling me if reading Opinio Juris makes you feel highly rational.

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Santorum: Please Don’t Google

If you Google “Santorum,” you’ll find that two of the top three search results take an unusual angle on the Republican candidate, thanks to sex columnist Dan Savage. (I very nearly used “Santorum” as a Google example in class last semester, and only just thought better of it.) Santorum’s supporters want Google to push the, er, less conventional site further down the rankings, and allege that Google’s failure to do so is political biased. That claim is obviously a load of Santorum, but the situation has drawn more thoughtful responses. Danny Sullivan argues that Google should implement a disclaimer, because kids may search on “Santorum” and be disturbed by what they find, or because they may think Google has a political agenda. (The site has one for “jew,” for example. For a long time, the first result for that search term was to the odious and anti-Semitic JewWatch site.)

This suggestion is well-intentioned but flatly wrong. I’m not an absolutist: I like how Google handled the problem of having a bunch of skinheads show up as a top result for “jew.” But I don’t want Google as the Web police, though many disagree. Should the site implement a disclaimer if you search for “Tommy Lee Pamela Anderson”? (Warning: sex tape.) If you search for “flat earth theory,” should Google tell you that you are potentially a moron? I don’t think so. Disclaimers should be the nuclear option for Google – partly so they continue to attract attention, and partly because they move Google from a primarily passive role as filter to a more active one as commentator. I generally like my Web results without knowing what Google thinks about them.

Evgeny Morozov has made a similar suggestion, though along different lines: he wants Google to put up a banner or signal when someone searches for links between vaccines and autism, or proof that the Pentagon / Israelis / Santa Claus was behind the 9/11 attacks. I’m more sympathetic to Evgeny’s idea, but I would limit banners or disclaimers to situations that meet two criteria. First, the facts of the issue must be clear-cut: pi is not equal to three (and no one really thinks so), and the planet is indisputably getting warmer. And second, the issue must be one that is both currently relevant and with significant consequences. The flat earthers don’t count; the anti-vaccine nuts do. (People who fail to immunize their children not only put them at risk; they put their classmates and friends at risk, too.) Lastly, I think there’s importance to having both a sense of humor and a respect for discordant, even false speech. The Santorum thing is darn funny. And, in the political realm, we have a laudable history of tolerating false or inflammatory speech, because we know the perils of censorship. So, keeping spreading Santorum!

Danielle, Frank, and the other CoOp folks have kindly let me hang around their blog like a slovenly houseguest, and I’d like to thank them for it. See you soon!

Cross-posted at Info/Law.