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1
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45949092359
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Carnegie Mellon University Libraries, Herbert Simon Collection, Exhibit, Problem Solving Research, http://shelf1.library.cmu.edu/IMLS/MindModels/ problemsolving.html (last visited Jan. 20, 2008).
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Carnegie Mellon University Libraries, Herbert Simon Collection, Exhibit, Problem Solving Research, http://shelf1.library.cmu.edu/IMLS/MindModels/ problemsolving.html (last visited Jan. 20, 2008).
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2
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45949083852
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Oct. 16, 1978, available at
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Press Release, The Royal Swedish Acad, of Scis., Studies of Decision-Making Lead to Prize in Economics (Oct. 16, 1978), available at http://nobelprize.org/nobel_prizes/economics/laureates/1978/press.html.
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Press Release, The Royal Swedish Acad, of Scis., Studies of Decision-Making Lead to Prize in Economics
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3
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0002788226
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A Simulation of Memory for Chess Positions, 5
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Herbert A. Simon & Kevin Gilmartin, A Simulation of Memory for Chess Positions, 5 COGNITIVE PSYCHOL. 29, 43 (1973).
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(1973)
COGNITIVE PSYCHOL
, vol.29
, pp. 43
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Simon, H.A.1
Gilmartin, K.2
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4
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45949084916
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HERBERT A. SIMON, THE SCIENCES OF THE ARTIFICIAL 188-90 (3d ed. 1996).
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HERBERT A. SIMON, THE SCIENCES OF THE ARTIFICIAL 188-90 (3d ed. 1996).
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5
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33645312654
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Henry Smith recounts this story in more detail and relates it to contract design. Henry E. Smith, Modularity in Contracts: Boilerplate and Information Flow, 104 MICH. L. REV. 1175, 1179-81, 1191 (2006).
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Henry Smith recounts this story in more detail and relates it to contract design. Henry E. Smith, Modularity in Contracts: Boilerplate and Information Flow, 104 MICH. L. REV. 1175, 1179-81, 1191 (2006).
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7
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45949090976
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Id. at 189-97; see also Byron Spice, CMU Legend Herbert Simon Dies at Age 84, PITTSBURGH POST-GAZETTE, Feb. 10, 2001, at A1 (stating that Simon and Newell launched the field of artificial intelligence).
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Id. at 189-97; see also Byron Spice, CMU Legend Herbert Simon Dies at Age 84, PITTSBURGH POST-GAZETTE, Feb. 10, 2001, at A1 (stating that Simon and Newell "launched the field of artificial intelligence").
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8
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84915606782
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Herbert A. Simon, Prometheus or Pandora: The Influence of Automation on Society, COMPUTER, Nov. 1981, at 69, 69-70.
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Herbert A. Simon, Prometheus or Pandora: The Influence of Automation on Society, COMPUTER, Nov. 1981, at 69, 69-70.
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9
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45949091247
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SIMON, supra note 4, at 80-83
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SIMON, supra note 4, at 80-83.
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10
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45949094396
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SIMON, supra note 5, at 198-99
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SIMON, supra note 5, at 198-99.
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11
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22544452705
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See, e.g., Richard Craswell, In That Case, What Is the Question? Economics and the Demands of Contract Theory, 112 YALE L.J. 903, 913-14 (2003) ([Contract law] is extremely difficult, with lots of effects that we do not yet understand.); Smith, supra note 4, at 1187-90 (describing contractual complexity and use of modular design principles to simplify information interactions).
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See, e.g., Richard Craswell, In That Case, What Is the Question? Economics and the Demands of Contract Theory, 112 YALE L.J. 903, 913-14 (2003) ("[Contract law] is extremely difficult, with lots of effects that we do not yet understand."); Smith, supra note 4, at 1187-90 (describing contractual complexity and use of modular design principles to simplify information interactions).
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12
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22544443648
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Valuing Modern Contract Scholarship, 112
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predicting rise in empirical analysis of contract law, See, e.g
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See, e.g., Ian Ayres, Valuing Modern Contract Scholarship, 112 YALE L.J. 881, 900 (2003) (predicting rise in empirical analysis of contract law);
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(2003)
YALE L.J
, vol.881
, pp. 900
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Ayres, I.1
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13
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0036992581
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Russell Korobkin, Empirical Scholarship in Contract Law: Possibilities and Pitfalls, 2002 U. ILL. L. REV. 1033, 1037 (offering framework for classifying and pursuing future empirical scholarship in contract law);
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Russell Korobkin, Empirical Scholarship in Contract Law: Possibilities and Pitfalls, 2002 U. ILL. L. REV. 1033, 1037 (offering framework for classifying and pursuing future empirical scholarship in contract law);
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14
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45949105832
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David V. Snyder, Go Out and Look: The Challenge and Promise of Empirical Scholarship in Contract Law, 80 TUL. L. REV. 1009,1009-10 (2006) (reflecting on current state of contracts scholarship and on heightened interest in empirical analysis).
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David V. Snyder, Go Out and Look: The Challenge and Promise of Empirical Scholarship in Contract Law, 80 TUL. L. REV. 1009,1009-10 (2006) (reflecting on current state of contracts scholarship and on heightened interest in empirical analysis).
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15
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45949103981
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Over the last decade, legal scholars from many fields have called for more empirical analysis. See RICHARD A. POSNER, OVERCOMING LAW 210-11 (1995) (urging greater scholarly attention to empiricism);
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Over the last decade, legal scholars from many fields have called for more empirical analysis. See RICHARD A. POSNER, OVERCOMING LAW 210-11 (1995) (urging greater scholarly attention to empiricism);
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16
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0036332194
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Lee Epstein & Gary King, The Rules of Inference, 69 U. CHI. L. REV. 1, 2, 6-7 (2002) [hereinafter Epstein & King, Rules of Inference] (recognizing importance of empirical legal scholarship but warning that it must be performed more carefully);
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Lee Epstein & Gary King, The Rules of Inference, 69 U. CHI. L. REV. 1, 2, 6-7 (2002) [hereinafter Epstein & King, Rules of Inference] (recognizing importance of empirical legal scholarship but warning that it must be performed more carefully);
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17
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45949089431
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Michael Heise, The Importance of Being Empirical, 26 PEPP. L. REV. 807, 810-12 (1999) (advocating for use of empirical work);
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Michael Heise, The Importance of Being Empirical, 26 PEPP. L. REV. 807, 810-12 (1999) (advocating for use of empirical work);
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18
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45949085966
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Richard A. Posner, The Decline of Law as an Autonomous Discipline: 1962-87, 100 HARV. L. REV. 761, 762-66 (1987) (offering historical explanation for scarcity of empirical scholarship);
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Richard A. Posner, The Decline of Law as an Autonomous Discipline: 1962-87, 100 HARV. L. REV. 761, 762-66 (1987) (offering historical explanation for scarcity of empirical scholarship);
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19
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0036989488
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Thomas S. Ulen, A Nobel Prize in Legal Science: Theory, Empirical Work, and the Scientific Method in the Study of Law, 2002 U. ILL. L. REV. 875, 876 ([R]ecent scholarly trends in the law show evidence of a movement toward an even more science-like discipline.). Likewise, scholars have considered institutional strategies for building the infrastructure needed to conduct this research.
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Thomas S. Ulen, A Nobel Prize in Legal Science: Theory, Empirical Work, and the Scientific Method in the Study of Law, 2002 U. ILL. L. REV. 875, 876 ("[R]ecent scholarly trends in the law show evidence of a movement toward an even more science-like discipline."). Likewise, scholars have considered institutional strategies for building the infrastructure needed to conduct this research.
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20
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0346913355
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See Lee Epstein & Gary King, Building an Infrastructure for Empirical Research in the Law, 53 J. LEGAL EDUC. 311, 312 (2003) [hereinafter Epstein & King, Building an Infrastructure] (offering four concrete categories of suggestions for improving empirical legal research);
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See Lee Epstein & Gary King, Building an Infrastructure for Empirical Research in the Law, 53 J. LEGAL EDUC. 311, 312 (2003) [hereinafter Epstein & King, Building an Infrastructure] (offering four concrete categories of suggestions for improving empirical legal research);
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21
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0347544234
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Matthew Spitzer, Evaluating Valuating Empiricism (at Law Schools), 53 J. LEGAL EDUC. 328 (2003) (responding to Epstein and King's suggestions);
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Matthew Spitzer, Evaluating Valuating Empiricism (at Law Schools), 53 J. LEGAL EDUC. 328 (2003) (responding to Epstein and King's suggestions);
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22
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0346283256
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David E. Van Zandt, Discipline-Based Faculty, 53 J. LEGAL EDUC. 332, 335-39 (2003) (same).
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David E. Van Zandt, Discipline-Based Faculty, 53 J. LEGAL EDUC. 332, 335-39 (2003) (same).
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45949092038
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The 2006 annual meeting of the Association of American Law Schools also sought to promote empirical work. Program, Ass'n of Am. Law Schs., Empirical Scholarship: What Should We Study and How Should We Study It? (Jan. 3-7, 2006), available at http://www.aals.org/am2006/program/finalprogrammain2006.pdf.
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The 2006 annual meeting of the Association of American Law Schools also sought to promote empirical work. Program, Ass'n of Am. Law Schs., Empirical Scholarship: What Should We Study and How Should We Study It? (Jan. 3-7, 2006), available at http://www.aals.org/am2006/program/finalprogrammain2006.pdf.
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24
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45949105075
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In this Essay, I use the term empirical to refer to both qualitative and quantitative analysis, although some commentators focus mostly on a lack of quantitative work. See Epstein & King, Rules of Inference, supra note 12, at 2-3 (describing how term empirical refers broadly to evidence about the world based on observation or experience); Snyder, supra note 11, at 1012 (same).
-
In this Essay, I use the term empirical to refer to both qualitative and quantitative analysis, although some commentators focus mostly on a lack of quantitative work. See Epstein & King, Rules of Inference, supra note 12, at 2-3 (describing how term "empirical" refers broadly to "evidence about the world based on observation or experience"); Snyder, supra note 11, at 1012 (same).
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25
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45949111369
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See Korobkin, supra note 11, at 1051-52 (None of the empirical contracts articles reviewed . . . present[s] data that makes up a truly representative sample of the population . . . . Consequently, critics will usually be able to raise legitimate questions about the extent to which descriptive conclusions or policy prescriptions can be inferred from empirical results.).
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See Korobkin, supra note 11, at 1051-52 ("None of the empirical contracts articles reviewed . . . present[s] data that makes up a truly representative sample of the population . . . . Consequently, critics will usually be able to raise legitimate questions about the extent to which descriptive conclusions or policy prescriptions can be inferred from empirical results.").
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26
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45949101038
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See Heise, note 12, at, describing difficulties inherent in conducting empirical legal scholarship
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See Heise, supra note 12, at 816-24 (describing difficulties inherent in conducting empirical legal scholarship).
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supra
, pp. 816-824
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27
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22544435816
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Economic Analysis of Contract Law After Three Decades: Success or Failure?, 112
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Eric A. Posner, Economic Analysis of Contract Law After Three Decades: Success or Failure?, 112 YALE L.J. 829, 864-65 (2003).
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(2003)
YALE L.J
, vol.829
, pp. 864-865
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Posner, E.A.1
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28
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45949112434
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See, e.g., Ayres, supra note 11, at 900 (joining Posner in welcoming and predicting a shift from the theoretical to the empirical); Russell Korobkin, Possibility and Plausibility in Law and Economics, 32 FLA. ST. U. L. REV. 781, 785 (2005) (I certainly support the widespread drumbeat for legal scholars to conduct more empirical analysis than our corner of the academy has produced historically.); Snyder, supra note 11, at 1009 (The opportune scholarly moment has arrived for empirical scholarship in contract law.).
-
See, e.g., Ayres, supra note 11, at 900 (joining Posner "in welcoming and predicting a shift from the theoretical to the empirical"); Russell Korobkin, Possibility and Plausibility in Law and Economics, 32 FLA. ST. U. L. REV. 781, 785 (2005) ("I certainly support the widespread drumbeat for legal scholars to conduct more empirical analysis than our corner of the academy has produced historically."); Snyder, supra note 11, at 1009 ("The opportune scholarly moment has arrived for empirical scholarship in contract law.").
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29
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33645290484
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Russell Korobkin conducted an extensive review of five hundred law journals from 1985 to 2000 to collect articles that explicitly applied empirical analysis to contract doctrine. He uncovered fewer than thirty articles, some of which only briefly discussed issues related to contract law. Ultimately, Korobkin deemed the empirical study of contract law, a very underdeveloped genre of legal scholarship. Korobkin, supra note 11, at 1036-37. Since Korobkin's article, it appears that interest in this type of work is rising, but most recent studies do not pursue normative recommendations for contract law, or do so only tangentially. See generally Omri Ben-Shahar & James J. White, Boilerplate and Economic Power in Auto Manufacturing Contracts, 104 MICH. L. REV. 953, 956-64 (2006, analyzing supplier contracts in automotive industry);
-
Russell Korobkin conducted an extensive review of five hundred law journals from 1985 to 2000 to collect articles that explicitly applied empirical analysis to contract doctrine. He uncovered fewer than thirty articles, some of which only briefly discussed issues related to contract law. Ultimately, Korobkin deemed "the empirical study of contract law . . . a very underdeveloped genre of legal scholarship." Korobkin, supra note 11, at 1036-37. Since Korobkin's article, it appears that interest in this type of work is rising, but most recent studies do not pursue normative recommendations for contract law, or do so only tangentially. See generally Omri Ben-Shahar & James J. White, Boilerplate and Economic Power in Auto Manufacturing Contracts, 104 MICH. L. REV. 953, 956-64 (2006) (analyzing supplier contracts in automotive industry);
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30
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45949107206
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A Consent Theory of Unconscionability: An Empirical Study of Law in Action, 33
-
coding 187 unconscionability cases to empirically examine effects of selected case characteristics on judicial outcomes
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Larry A. DiMatteo & Bruce Louis Rich, A Consent Theory of Unconscionability: An Empirical Study of Law in Action, 33 FLA. ST. U. L. REV. 1067, 1068-70 (2006) (coding 187 unconscionability cases to empirically examine effects of selected case characteristics on judicial outcomes);
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(2006)
FLA. ST. U. L. REV
, vol.1067
, pp. 1068-1070
-
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DiMatteo, L.A.1
Louis Rich, B.2
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31
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14944368075
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Contracting Out of National Law: An Empirical Look at the New Law Merchant, 80
-
examining use and prevalence of arbitration clauses in transnational commerce
-
Christopher R. Drahozal, Contracting Out of National Law: An Empirical Look at the New Law Merchant, 80 NOTRE DAME L. REV. 523, 536-42 (2005) (examining use and prevalence of arbitration clauses in transnational commerce);
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(2005)
NOTRE DAME L. REV
, vol.523
, pp. 536-542
-
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Drahozal, C.R.1
-
32
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33847037991
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Ex Ante Choices of Law and Forum: An Empirical Analysis of Corporate Merger Agreements, 59
-
examining choice-of-law provisions in corporate merger contracts
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Theodore Eisenberg & Geoffrey Miller, Ex Ante Choices of Law and Forum: An Empirical Analysis of Corporate Merger Agreements, 59 VAND. L. REV. 1975, 1981 (2006) (examining choice-of-law provisions in corporate merger contracts);
-
(2006)
VAND. L. REV. 1975
, pp. 1981
-
-
Eisenberg, T.1
Miller, G.2
-
33
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45949090654
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M.P. Ellinghaus & E.W. Wright, The Common Law of Contracts: Are Broad Principles Better than Detailed Rules? An Empirical Investigation, 11 TEX. WESLEYAN L. REV. 399, 408-19 (2005) (conducting three empirical experiments replicating judicial resolution of contractual disputes);
-
M.P. Ellinghaus & E.W. Wright, The Common Law of Contracts: Are Broad Principles Better than Detailed Rules? An Empirical Investigation, 11 TEX. WESLEYAN L. REV. 399, 408-19 (2005) (conducting three empirical experiments replicating judicial resolution of contractual disputes);
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34
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33645306272
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The Return of Bargain: An Economic Theory of How Standard-Form Contracts Enable Cooperative Negotiation Between Businesses and Consumers, 104
-
demonstrating empirically that standard-form consumer contracts often grant agents of drafting party discretion to deviate from negotiated terms
-
Jason Scott Johnston, The Return of Bargain: An Economic Theory of How Standard-Form Contracts Enable Cooperative Negotiation Between Businesses and Consumers, 104 MICH. L. REV. 857, 864-76 (2006) (demonstrating empirically that standard-form consumer contracts often grant agents of drafting party discretion to deviate from negotiated terms);
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(2006)
MICH. L. REV
, vol.857
, pp. 864-876
-
-
Scott Johnston, J.1
-
35
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43949103054
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Benjamin Klein & Joshua D. Wright, The Economics of Slotting Contracts, 50 J.L. & ECON. (forthcoming 2007) (manuscript at 33-46), available at http://ssrn.com/abstract=773464 (examining shelf space contracts in retail industry);
-
Benjamin Klein & Joshua D. Wright, The Economics of Slotting Contracts, 50 J.L. & ECON. (forthcoming 2007) (manuscript at 33-46), available at http://ssrn.com/abstract=773464 (examining shelf space contracts in retail industry);
-
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36
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45949105230
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Florencia Marotta-Wurgler, What's in a Standard Form Contract? An Empirical Analysis of Software License Agreements, 4 J. EMPIRICAL LEGAL STUD. 677, 679, 702-12 (2007) (analyzing key terms in approximately 647 software licensing contracts to determine whether agreements present substantive unconscionability problems);
-
Florencia Marotta-Wurgler, What's in a Standard Form Contract? An Empirical Analysis of Software License Agreements, 4 J. EMPIRICAL LEGAL STUD. 677, 679, 702-12 (2007) (analyzing key terms in approximately 647 software licensing contracts to determine whether agreements present substantive unconscionability problems);
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37
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45949112280
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Deborah A. Schmedemann, Beyond Words: An Empirical Study of Context in Contract Creation, 55 S.C. L. REV. 145, 154-70 (2003) (conducting empirical experiment relating to creation of employment contracts);
-
Deborah A. Schmedemann, Beyond Words: An Empirical Study of Context in Contract Creation, 55 S.C. L. REV. 145, 154-70 (2003) (conducting empirical experiment relating to creation of employment contracts);
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38
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45949105387
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Stewart J. Schwab & Randall S. Thomas, An Empirical Analysis of CEO Employment Contracts: What Do Top Executives Bargain For?, 63 WASH. & LEE L. REV. 231, 240-58 (2006) (examining 375 CEO employment contracts, reporting on key terms, and linking analysis to corporate law). I have surely missed some other important studies, but I still think it is fair to assert that there is a dearth of high-quality empirical research in this area.
-
Stewart J. Schwab & Randall S. Thomas, An Empirical Analysis of CEO Employment Contracts: What Do Top Executives Bargain For?, 63 WASH. & LEE L. REV. 231, 240-58 (2006) (examining 375 CEO employment contracts, reporting on key terms, and linking analysis to corporate law). I have surely missed some other important studies, but I still think it is fair to assert that there is a dearth of high-quality empirical research in this area.
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39
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45949109211
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For a collection of introductory articles related to knowledge management, see HARVARD BUSINESS REVIEW ON KNOWLEDGE MANAGEMENT (Harvard Bus. Review ed., 1998).
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For a collection of introductory articles related to knowledge management, see HARVARD BUSINESS REVIEW ON KNOWLEDGE MANAGEMENT (Harvard Bus. Review ed., 1998).
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40
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45949092169
-
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For a more comprehensive synthesis of work in this area, see
-
For a more comprehensive synthesis of work in this area, see KIMIZ DALKIR, KNOWLEDGE MANAGEMENT IN THEORY AND PRACTICE (2005).
-
(2005)
-
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KIMIZ DALKIR, K.1
IN, M.2
AND PRACTICE, T.3
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41
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45949107058
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See infra Part II.C.1.
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See infra Part II.C.1.
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42
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33846467857
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Part II
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See infra Part II.
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See infra
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43
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45949100713
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Spice, supra note 6
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Spice, supra note 6.
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44
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45949099019
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This is particularly true for doctrinal or descriptive research, and the analytical methods explored infra Part III.A should be applicable to help automate work in any legal discipline with a robust body of judicial or administrative opinions. The analogy is even tighter for areas of the law that produce other large collections of unstructured data, such as business organizations or securities regulation
-
This is particularly true for doctrinal or descriptive research, and the analytical methods explored infra Part III.A should be applicable to help automate work in any legal discipline with a robust body of judicial or administrative opinions. The analogy is even tighter for areas of the law that produce other large collections of unstructured data, such as business organizations or securities regulation.
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45
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45949095943
-
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I say often because some contracts, such as implied-in-fact contracts or quasi-contracts, leave little permanent record. It also may be hard to assemble historical data for some types of contracts, such as verbal agreements. It is worth noting, however, that the knowledge-management algorithms described in this Essay are successfully being used on voice recordings. See, e.g, AUTONOMY SYS. LTD, AUDIO AND BROADCAST WHITE PAPER 5-10 (2003, http://www.autonomy.com/content/downloads/White%20Papers/index.en.html follow Autonomy Audio Broadcast White Paper 20031003 hyperlink; then fill out pop-up form for free customer membership; then reclick on same hyperlink, last visited Mar. 3, 2008, describing use of knowledge-management algorithms to manage voice and other digital multimedia data
-
I say "often" because some contracts, such as implied-in-fact contracts or quasi-contracts, leave little permanent record. It also may be hard to assemble historical data for some types of contracts, such as verbal agreements. It is worth noting, however, that the knowledge-management algorithms described in this Essay are successfully being used on voice recordings. See, e.g., AUTONOMY SYS. LTD., AUDIO AND BROADCAST WHITE PAPER 5-10 (2003), http://www.autonomy.com/content/downloads/White%20Papers/index.en.html (follow "Autonomy Audio Broadcast White Paper 20031003" hyperlink; then fill out pop-up form for free customer membership; then reclick on same hyperlink) (last visited Mar. 3, 2008) (describing use of knowledge-management algorithms to manage voice and other digital multimedia data).
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46
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45949085350
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Some of this work also offers a descriptive understanding of contract law, but more recent emphasis has been placed on the normative (either explicitly or implicitly). See Craswell, supra note 10, at 903-07 (describing contemporary preference for normative work).
-
Some of this work also offers a descriptive understanding of contract law, but more recent emphasis has been placed on the normative (either explicitly or implicitly). See Craswell, supra note 10, at 903-07 (describing contemporary preference for normative work).
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47
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45949095944
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For helpful discussions of economic analysis in contract law, see ROBERT COOTER & THOMAS S. ULEN, LAW AND ECONOMICS, 188-294 (4th ed. 2004),
-
For helpful discussions of economic analysis in contract law, see ROBERT COOTER & THOMAS S. ULEN, LAW AND ECONOMICS, 188-294 (4th ed. 2004),
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48
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45949109524
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RICHARD A. POSNER, ECONOMIC ANALYSIS OF THE LAW §§ 4.1-.15 (6th ed. 2003),
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RICHARD A. POSNER, ECONOMIC ANALYSIS OF THE LAW §§ 4.1-.15 (6th ed. 2003),
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49
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45949106192
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3, Boudewijn Bouckaert & Gerrit De Geest eds
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3 ENCYCLOPEDIA OF LAW AND ECONOMICS §§ 4000-4800 (Boudewijn Bouckaert & Gerrit De Geest eds., 2000),
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(2000)
§§ 4000-4800
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OF, E.1
AND ECONOMICS, L.2
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50
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and Benjamin E. Hermalin et al., Contract Law, in THE HANDBOOK OF LAW AND ECONOMICS 7-128 (A. Mitchell Polinsky & Steven Shavell eds., 2007).
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and Benjamin E. Hermalin et al., Contract Law, in THE HANDBOOK OF LAW AND ECONOMICS 7-128 (A. Mitchell Polinsky & Steven Shavell eds., 2007).
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See, e.g., Craswell, supra note 10, at 910-11 (describing ability of economic analysis to assess individual pieces of the normative puzzle even when it fails to recommend the most efficient rule); Alan Schwartz & Robert E. Scott, Contract Theory and the Limits of Contract Law, 113 YALE L.J. 541, 543-44 (2003) (using economic contract theory to develop normative theory to guide decisionmakers in the regulation of business contracts). Of course, the economic framework is not the only vehicle for understanding contract law. Other theories of contract law consider moral and philosophical arguments for determining which promises should be legally binding.
-
See, e.g., Craswell, supra note 10, at 910-11 (describing ability of economic analysis to assess "individual pieces of the normative puzzle" even when it fails to "recommend the most efficient rule"); Alan Schwartz & Robert E. Scott, Contract Theory and the Limits of Contract Law, 113 YALE L.J. 541, 543-44 (2003) (using economic contract theory to develop "normative theory to guide decisionmakers in the regulation of business contracts"). Of course, the economic framework is not the only vehicle for understanding contract law. Other theories of contract law consider moral and philosophical arguments for determining which promises should be legally binding.
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52
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74849096289
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A Consent Theory of Contract Law, 86
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describing alternative theories of contract law, See, e.g
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See, e.g., Randy E. Barnett, A Consent Theory of Contract Law, 86 COLUM. L. REV. 269, 269-89 (1986) (describing alternative theories of contract law).
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(1986)
COLUM. L. REV
, vol.269
, pp. 269-289
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Barnett, R.E.1
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53
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45949100541
-
-
In other words, the buyer's valuation exceeds the seller's cost of production in at least some future states of the world. One or both parties may also be able to make relationship-specific investments at a future time to increase the gains from trade. This step provides additional justification for legal enforcement of time-deferred commitments in order to counter postreliance opportunism by the other party. See Schwartz & Scott, supra note 27, at 559-62 (Enforcement . . . permits parties to make believable promises to each other when reputational or self-enforcement sanctions will not avail.).
-
In other words, the buyer's valuation exceeds the seller's cost of production in at least some future states of the world. One or both parties may also be able to make relationship-specific investments at a future time to increase the gains from trade. This step provides additional justification for legal enforcement of time-deferred commitments in order to counter postreliance opportunism by the other party. See Schwartz & Scott, supra note 27, at 559-62 ("Enforcement . . . permits parties to make believable promises to each other when reputational or self-enforcement sanctions will not avail.").
-
-
-
-
54
-
-
45949104740
-
-
Economic superiority is usually defined in terms of welfare maximization through Pareto efficiency. E.g., Posner, supra note 16, at 833 n.8.
-
Economic superiority is usually defined in terms of welfare maximization through Pareto efficiency. E.g., Posner, supra note 16, at 833 n.8.
-
-
-
-
55
-
-
18944385479
-
The Law and Economics of Contract Interpretation, 83
-
Richard A. Posner, The Law and Economics of Contract Interpretation, 83 TEX. L. REV. 1581, 1581-84 (2005).
-
(2005)
TEX. L. REV
, vol.1581
, pp. 1581-1584
-
-
Posner, R.A.1
-
56
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45949083681
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Id. at 1583
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Id. at 1583.
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57
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45949104167
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at
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Id. at 1583-84.
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58
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Id
-
Id.
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59
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45949108325
-
-
Judge Posner does not explicitly say this, but a natural extension of his work might contend that courts should enforce vague contracts only when parties make efficient tradeoffs between the various costs of contract formation. See id. (The object of judicial enforcement of contracts is to minimize the sum of . . . the drafting-stage costs and the litigation-stage costs, rather than, as might seem tempting, to insist that parties do whatever is necessary at the first stage to minimize the likelihood of litigation.).
-
Judge Posner does not explicitly say this, but a natural extension of his work might contend that courts should enforce vague contracts only when parties make efficient tradeoffs between the various costs of contract formation. See id. ("The object of judicial enforcement of contracts is to minimize the sum of . . . the drafting-stage costs and the litigation-stage costs, rather than, as might seem tempting, to insist that parties do whatever is necessary at the first stage to minimize the likelihood of litigation.").
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60
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45949098119
-
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Much of this work deals with economic analysis of contract remedies. See, e.g., Posner, supra note 16, at 834-37 & 837 n.16 (discussing economic arguments related to remedies); Alan Schwartz, The Case for Specific Performance, 89 YALE L.J. 271, 274-78 (1979) (linking economic goals of contract law to alternative remedy regimes).
-
Much of this work deals with economic analysis of contract remedies. See, e.g., Posner, supra note 16, at 834-37 & 837 n.16 (discussing economic arguments related to remedies); Alan Schwartz, The Case for Specific Performance, 89 YALE L.J. 271, 274-78 (1979) (linking economic goals of contract law to alternative remedy regimes).
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61
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45949104317
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Ulen, supra note 12, at 878; see also Thomas S. Ulen, The Unexpected Guest: Law and Economics, Law and Other Cognate Disciplines, and the Future of Legal Scholarship, 79 CHI.-KENT L. REV. 403, 409-14 (2004) (explaining how legal scholarship is moving away from doctrinalism and toward proto-scientific method of inquiry).
-
Ulen, supra note 12, at 878; see also Thomas S. Ulen, The Unexpected Guest: Law and Economics, Law and Other Cognate Disciplines, and the Future of Legal Scholarship, 79 CHI.-KENT L. REV. 403, 409-14 (2004) (explaining how legal scholarship is moving away from doctrinalism and toward "proto-scientific" method of inquiry).
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62
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See sources cited supra note 17
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See sources cited supra note 17.
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63
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-
Korobkin, supra note 11, at 1061; see also D. Gordon Smith, The Branding Effect of Contracts, 12 HARV. NEGOT. L. REV. 189, 191 (2007) (Instead of focusing on contract doctrine or relationship management, legal scholars could have elected to study contract documents. For the better part of the last three decades, however, such studies have been performed primarily by economists and a smattering of others who work outside of the legal academy.).
-
Korobkin, supra note 11, at 1061; see also D. Gordon Smith, The "Branding Effect" of Contracts, 12 HARV. NEGOT. L. REV. 189, 191 (2007) ("Instead of focusing on contract doctrine or relationship management, legal scholars could have elected to study contract documents. For the better part of the last three decades, however, such studies have been performed primarily by economists and a smattering of others who work outside of the legal academy.").
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64
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45949109689
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-
See sources cited supra note 18
-
See sources cited supra note 18.
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-
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65
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45949100252
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note 18, at, analyzing 375 employment contracts between CEOs and large public companies
-
Schwab & Thomas, supra note 18, at 232-33 (analyzing 375 employment contracts between CEOs and large public companies).
-
supra
, pp. 232-233
-
-
Schwab1
Thomas2
-
66
-
-
45949104164
-
-
note 18, at, analyzing 412 public corporate merger agreements filed with SEC in
-
Eisenberg & Miller, supra note 18, at 1981-85 (analyzing 412 public corporate merger agreements filed with SEC in 2002).
-
(2002)
supra
, pp. 1981-1985
-
-
Eisenberg1
Miller2
-
67
-
-
0347593601
-
-
Robert E. Scott, A Theory of Self-Enforcing Indefinite Agreements, 103 COLUM. L. REV. 1641, 1652-53, 1692 (2003). This work is discussed in more detail infra notes 117-20 and accompanying text.
-
Robert E. Scott, A Theory of Self-Enforcing Indefinite Agreements, 103 COLUM. L. REV. 1641, 1652-53, 1692 (2003). This work is discussed in more detail infra notes 117-20 and accompanying text.
-
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68
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45949103985
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Scott, supra note 42, at 1660
-
Scott, supra note 42, at 1660.
-
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69
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45949085799
-
-
See Johnston, note 18, at, presenting data from hospital industry, credit card industry, and other consumer contexts
-
See Johnston, supra note 18, at 865-76 (presenting data from hospital industry, credit card industry, and other consumer contexts).
-
supra
, pp. 865-876
-
-
-
70
-
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45949111830
-
-
See, e.g., Ben-Shahar & White, supra note 18, at 954-55 (studying automotive supply contracts and arguing that the way the form contracts are drafted gives a detailed understanding of how and when tailoring of terms takes place and how internal organizational features are harnessed to affect the outcome of negotiations over contract terms); Marotta-Wurgler, supra note 18, at 678-81 (examining collection of terms in roughly 650 standard-form software-licensing contracts to shed light on what rules should govern such agreements).
-
See, e.g., Ben-Shahar & White, supra note 18, at 954-55 (studying automotive supply contracts and arguing that "the way the form contracts are drafted gives a detailed understanding of how and when tailoring of terms takes place and how internal organizational features are harnessed to affect the outcome of negotiations over contract terms"); Marotta-Wurgler, supra note 18, at 678-81 (examining collection of terms in roughly 650 standard-form software-licensing contracts to shed light on what rules should govern such agreements).
-
-
-
-
71
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45949099353
-
-
In other words, the analysis in a judicial opinion is itself an assessment of how the world works based on observation or experience, and thus it meets the definition of qualitative empirical research. Cf. Korobkin, supra note 11, at 1035 ([Empiricism] include[s] any attempt to collect and analyze a set of data for more than anecdotal purposes . . . .).
-
In other words, the analysis in a judicial opinion is itself an assessment of how the world works based on observation or experience, and thus it meets the definition of qualitative empirical research. Cf. Korobkin, supra note 11, at 1035 ("[Empiricism] include[s] any attempt to collect and analyze a set of data for more than anecdotal purposes . . . .").
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72
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84925194420
-
-
See, e.g., ROGER D. BLAIR & FRANCINE LAFONTAINE, THE ECONOMICS OF FRANCHISING 54-81 (2005) (analyzing franchise contracts);
-
See, e.g., ROGER D. BLAIR & FRANCINE LAFONTAINE, THE ECONOMICS OF FRANCHISING 54-81 (2005) (analyzing franchise contracts);
-
-
-
-
73
-
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70449890420
-
Innovation in Boilerplate Contracts: An Empirical Examination of Sovereign Bonds, 53
-
analyzing sovereign bond contracts
-
Stephen J. Choi & G. Mitu Gulati, Innovation in Boilerplate Contracts: An Empirical Examination of Sovereign Bonds, 53 EMORY L.J. 929, 931-32 (2004) (analyzing sovereign bond contracts);
-
(2004)
EMORY L.J
, vol.929
, pp. 931-932
-
-
Choi, S.J.1
Mitu Gulati, G.2
-
74
-
-
0032388925
-
Investment Opportunities and the Design of Debt Securities, 14
-
analyzing bond indentures
-
Marcel Kahan & David Yermack, Investment Opportunities and the Design of Debt Securities, 14 J.L. ECON. & ORG. 136, 136-37 (1998) (analyzing bond indentures);
-
(1998)
J.L. ECON. & ORG
, vol.136
, pp. 136-137
-
-
Kahan, M.1
Yermack, D.2
-
75
-
-
6344230194
-
Characteristics, Contracts, and Actions: Evidence from Venture Capital Analyses, 59
-
analyzing venture capital contracts
-
Steven N. Kaplan & Per Stromberg, Characteristics, Contracts, and Actions: Evidence from Venture Capital Analyses, 59 J. FIN. 2177, 2177 (2004) (analyzing venture capital contracts).
-
(2004)
J. FIN
, vol.2177
, pp. 2177
-
-
Kaplan, S.N.1
Stromberg, P.2
-
76
-
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45949111815
-
-
While it is an important question, I do not want to spend too much time asking why there has not been more empirical work in contract law. Plenty of other thoughtful articles explore the challenges of that work, which include the need for training in statistics and quantitative methods, time delays arising from data collection or from painstaking efforts to code and analyze this data, and other institutional and logistical factors. See, e.g, Epstein & King, Rules of Inference, supra note 12, at 114-33 (advocating for development of infrastructure to support empirical research in legal scholarship, Heise, supra note 12, at 810-24 suggesting reasons for dearth of empirical research in legal scholarship
-
While it is an important question, I do not want to spend too much time asking why there has not been more empirical work in contract law. Plenty of other thoughtful articles explore the challenges of that work, which include the need for training in statistics and quantitative methods, time delays arising from data collection or from painstaking efforts to code and analyze this data, and other institutional and logistical factors. See, e.g., Epstein & King, Rules of Inference, supra note 12, at 114-33 (advocating for development of infrastructure to support empirical research in legal scholarship); Heise, supra note 12, at 810-24 (suggesting reasons for "dearth" of empirical research in legal scholarship).
-
-
-
-
77
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45949100250
-
-
See Posner, supra note 16, at 837 ([T]he relevant variables are too complex and too hard to determine. We do not observe doctrine incorporating them, nor do we have enough empirical data to be able to guess which rule is based on assumptions that are closer to reality.).
-
See Posner, supra note 16, at 837 ("[T]he relevant variables are too complex and too hard to determine. We do not observe doctrine incorporating them, nor do we have enough empirical data to be able to guess which rule is based on assumptions that are closer to reality.").
-
-
-
-
78
-
-
84963456897
-
-
notes 28-35 and accompanying text
-
See supra notes 28-35 and accompanying text.
-
See supra
-
-
-
79
-
-
45949086435
-
-
See Posner, supra note 16, at 880 (Models that have been proposed . . . make optimal doctrine a function of variables that cannot realistically be observed, measured, or estimated.).
-
See Posner, supra note 16, at 880 ("Models that have been proposed . . . make optimal doctrine a function of variables that cannot realistically be observed, measured, or estimated.").
-
-
-
-
80
-
-
45949097834
-
-
Id. at 853-54
-
Id. at 853-54.
-
-
-
-
81
-
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45949106019
-
-
Richard Craswell nicely synthesizes Posner's concerns: [W]e cannot decide which remedy is best in any overall sense . . . unless we have some way of measuring the relevant effects, both good and bad, and then summing them to come up with a combined score for each of the possible remedies. But if we lack empirical data to measure the magnitudes of the various effects, any such sum will be difficult - or even impossible - to construct, so we will never know which remedy is truly the most efficient. Craswell, supra note 10, at 908.
-
Richard Craswell nicely synthesizes Posner's concerns: [W]e cannot decide which remedy is "best" in any overall sense . . . unless we have some way of measuring the relevant effects, both good and bad, and then summing them to come up with a combined score for each of the possible remedies. But if we lack empirical data to measure the magnitudes of the various effects, any such sum will be difficult - or even impossible - to construct, so we will never know which remedy is truly the most efficient. Craswell, supra note 10, at 908.
-
-
-
-
82
-
-
45949083518
-
-
See Posner, supra note 16, at 880 (concluding that economic analysis leaves decisionmaker with little guidance as to how best to reform contract law).
-
See Posner, supra note 16, at 880 (concluding that economic analysis leaves decisionmaker with "little guidance" as to how best to reform contract law).
-
-
-
-
83
-
-
45949111671
-
-
I have tried to conduct some of it myself and have had to qualify most of the conclusions because certain variables are grounded in assumptions. See George S. Geis, Empirically Assessing Hadley v. Baxendale, 32 FLA. ST. U. L. REV. 897, 921-49 (2005, hereinafter Geis, Empirically Assessing Hadley, modeling and testing Hadley rule barring unforeseeable consequential damages);
-
I have tried to conduct some of it myself and have had to qualify most of the conclusions because certain variables are grounded in assumptions. See George S. Geis, Empirically Assessing Hadley v. Baxendale, 32 FLA. ST. U. L. REV. 897, 921-49 (2005) [hereinafter Geis, Empirically Assessing Hadley] (modeling and testing Hadley rule barring unforeseeable consequential damages);
-
-
-
-
84
-
-
45949086901
-
-
George S. Geis, An Experiment in the Optimal Precision of Contract Default Rules, 80 TUL. L. REV. 1109, 1139-47 (2006) [hereinafter Geis, Optimal Precision] (extending Hadley analysis into sample economy comprised of five diverse markets).
-
George S. Geis, An Experiment in the Optimal Precision of Contract Default Rules, 80 TUL. L. REV. 1109, 1139-47 (2006) [hereinafter Geis, Optimal Precision] (extending Hadley analysis into sample economy comprised of five diverse markets).
-
-
-
-
85
-
-
45949086764
-
-
Contracting and Organizations Research Institute, Digital Contracts Library, http://cori.missouri.edu/pages/ksearch.htm (last visited Jan. 28, 2008).
-
Contracting and Organizations Research Institute, Digital Contracts Library, http://cori.missouri.edu/pages/ksearch.htm (last visited Jan. 28, 2008).
-
-
-
-
86
-
-
45949086434
-
-
Public firms are required to file material contracts with the SEC when they register securities under the Securities Act of 1933, 15 U.S.C § 77aa 2000, The public can easily access these contracts through EDGAR, through Lexis, or, increasingly, through third-party aggregators who collect, update, and host full-text contract databases. One organization, ONECLE, last visited Jan. 28, 2007, lists over ten thousand business contracts from SEC filings, sorted by industry and transaction type. This information is worth studying, but it is important to note two selection-bias concerns. First, most nonmaterial contracts are not disclosed
-
Public firms are required to file material contracts with the SEC when they register securities under the Securities Act of 1933, 15 U.S.C § 77aa (2000). The public can easily access these contracts through EDGAR, through Lexis, or, increasingly, through third-party aggregators who collect, update, and host full-text contract databases. One organization, ONECLE, http://www.onecle.com (last visited Jan. 28, 2007), lists over ten thousand business contracts from SEC filings, sorted by industry and transaction type. This information is worth studying, but it is important to note two selection-bias concerns. First, most "nonmaterial" contracts are not disclosed.
-
-
-
-
87
-
-
34248655950
-
The New Wal-Mart Effect: The Role of Private Contracting in Global Governance, 54
-
describing how SEC filing obligations only extend to material contracts, Second, there is likely to be an underrepresentation of contracts involving private companies. See, e.g
-
See, e.g., Michael P. Vandenbergh, The New Wal-Mart Effect: The Role of Private Contracting in Global Governance, 54 UCLA L. REV. 913, 936-37 (2007) (describing how SEC filing obligations only extend to material contracts). Second, there is likely to be an underrepresentation of contracts involving private companies.
-
(2007)
UCLA L. REV
, vol.913
, pp. 936-937
-
-
Vandenbergh, M.P.1
-
88
-
-
45949083368
-
-
The World Intellectual Property Organization is compiling a database of contracts related to biodiversity. World Intellectual Property Organization, Contracts Database, last visited Jan. 28, 2007
-
The World Intellectual Property Organization is compiling a database of contracts related to biodiversity. World Intellectual Property Organization, Contracts Database, http://www.wipo.int/tk/en/databases/contracts/index.html (last visited Jan. 28, 2007).
-
-
-
-
89
-
-
45949091392
-
-
The University of California, Berkeley has a project collecting labor contracts. Institute for Research on Labor and Employment, Labor Contracts Database, http://www.irle.berkeley.edu/library/index.php?page=3 (last visited Jan. 28, 2008).
-
The University of California, Berkeley has a project collecting labor contracts. Institute for Research on Labor and Employment, Labor Contracts Database, http://www.irle.berkeley.edu/library/index.php?page=3 (last visited Jan. 28, 2008).
-
-
-
-
90
-
-
45949085488
-
-
The Kansas City Regional Purchasing Cooperative, a partnership of regional councils and local governments, gathers full-text versions of government purchase contracts. Kansas City Regional Purchasing Cooperative, Contract Database, http://www.marc.org/kcrpc/contracts.htm (last visited Jan. 28, 2008).
-
The Kansas City Regional Purchasing Cooperative, a partnership of regional councils and local governments, gathers full-text versions of government purchase contracts. Kansas City Regional Purchasing Cooperative, Contract Database, http://www.marc.org/kcrpc/contracts.htm (last visited Jan. 28, 2008).
-
-
-
-
91
-
-
45949098260
-
-
See infra Part II.C.1.
-
See infra Part II.C.1.
-
-
-
-
92
-
-
45949112138
-
-
See, e.g., IAN AYRES, SUPER CRUNCHERS: WHY THINKING-BY-NUMBERS IS THE NEW WAY TO BE SMART 9-13 (2007) (describing use of large empirical databases as basis for reaching better decisions in wide variety of contexts).
-
See, e.g., IAN AYRES, SUPER CRUNCHERS: WHY THINKING-BY-NUMBERS IS THE NEW WAY TO BE SMART 9-13 (2007) (describing use of large empirical databases as basis for reaching better decisions in wide variety of contexts).
-
-
-
-
93
-
-
33845369004
-
The Efficient Performance Hypothesis, 116
-
Richard R.W. Brooks, The Efficient Performance Hypothesis, 116 YALE L.J. 568, 573-74 (2006).
-
(2006)
YALE L.J
, vol.568
, pp. 573-574
-
-
Brooks, R.R.W.1
-
94
-
-
8744279274
-
Embedded Options and the Case Against Compensation in Contract Law, 104
-
For further implications of the options framework in contract law, see
-
For further implications of the options framework in contract law, see Robert E. Scott & George G. Triantis, Embedded Options and the Case Against Compensation in Contract Law, 104 COLUM. L. REV. 1428, 1429-30 (2004).
-
(2004)
COLUM. L. REV
, vol.1428
, pp. 1429-1430
-
-
Scott, R.E.1
Triantis, G.G.2
-
95
-
-
45949097489
-
-
Brooks, supra note 61, at 581-84. This is true because both rules cause one party to internalize the marginal costs and benefits of performance. Id. It is interesting to ask, however, whether distortions from a promisee's incentive to overrely with expectation damages (because he sets the probability of breach at zero) might differ from distortions caused by promisor incentives to take inadequate precautions against breach (because she sets the probability of actually performing at less than one).
-
Brooks, supra note 61, at 581-84. This is true because both rules cause one party to internalize the marginal costs and benefits of performance. Id. It is interesting to ask, however, whether distortions from a promisee's incentive to overrely with expectation damages (because he sets the probability of breach at zero) might differ from distortions caused by promisor incentives to take inadequate precautions against breach (because she sets the probability of actually performing at less than one).
-
-
-
-
96
-
-
45949103721
-
-
Given this efficiency toss-up, Brooks goes on to advocate the efficient-performance hypothesis by turning to moral and philosophical reasoning. Id. at 591-95. An alternative approach, in the face of multiple equilibria, might be to conduct further inquiry into the relative administrative costs of each alternative - for example, will it cost more to figure out seller cost or buyer valuation? See Eric A. Posner, What the Efficient Performance Hypothesis Means for Contracts Scholarship, 116 YALE L.J. POCKET PART 438, 439-40 (2007), http://yalelawjournal.org/2007/07/23/posner.html (discussing significance of administrative costs given multiple equilibria).
-
Given this efficiency toss-up, Brooks goes on to advocate the efficient-performance hypothesis by turning to moral and philosophical reasoning. Id. at 591-95. An alternative approach, in the face of multiple equilibria, might be to conduct further inquiry into the relative administrative costs of each alternative - for example, will it cost more to figure out seller cost or buyer valuation? See Eric A. Posner, What the Efficient Performance Hypothesis Means for Contracts Scholarship, 116 YALE L.J. POCKET PART 438, 439-40 (2007), http://yalelawjournal.org/2007/07/23/posner.html (discussing significance of administrative costs given multiple equilibria).
-
-
-
-
97
-
-
45949109960
-
-
Lisa Bernstein, for example, has explored the underlying intentions of promisors in the diamond industry. See Lisa Bernstein, Opting Out of the Legal System: Extralegal Contractual Relations in the Diamond Industry, 21 J. LEGAL STUD. 115,115-16 (1992) (outlining possible reasons why diamond trade has unique system of private governance).
-
Lisa Bernstein, for example, has explored the underlying intentions of promisors in the diamond industry. See Lisa Bernstein, Opting Out of the Legal System: Extralegal Contractual Relations in the Diamond Industry, 21 J. LEGAL STUD. 115,115-16 (1992) (outlining possible reasons why diamond trade has unique system of private governance).
-
-
-
-
98
-
-
45949089875
-
-
Indeed, I argue throughout this Essay that it is rarely possible to gather enough information to lift decisional ambiguity like a stage curtain and reveal the rational decision. See infra notes 69-70 and accompanying text.
-
Indeed, I argue throughout this Essay that it is rarely possible to gather enough information to lift decisional ambiguity like a stage curtain and reveal the "rational" decision. See infra notes 69-70 and accompanying text.
-
-
-
-
99
-
-
85127097009
-
-
The diversity of this information can most easily be seen in the marketing literature. See, e.g., Randolph E. Bucklin & Catarina Sismeiro, A Model of Web Site Browsing Behavior Estimated on Clickstream Data, 40 J. MARKETING RES. 249 (2003) (examining browsing behavior of 5000 random visitors to the website of an Internet automotive reseller);
-
The diversity of this information can most easily be seen in the marketing literature. See, e.g., Randolph E. Bucklin & Catarina Sismeiro, A Model of Web Site Browsing Behavior Estimated on Clickstream Data, 40 J. MARKETING RES. 249 (2003) (examining browsing behavior of 5000 random visitors to the website of an Internet automotive reseller);
-
-
-
-
100
-
-
0032237541
-
Coordinating Channels Under Price and Nonprice Competition, 17
-
exploring how sellers should coordinate distribution channels when retailers compete on both price and nonprice terms
-
Ganesh Iyer, Coordinating Channels Under Price and Nonprice Competition, 17 MARKETING SCI. 338, 352-53 (1998) (exploring how sellers should coordinate distribution channels when retailers compete on both price and nonprice terms);
-
(1998)
MARKETING SCI
, vol.338
, pp. 352-353
-
-
Iyer, G.1
-
101
-
-
0033235403
-
-
Sanjeev Swami et al., SilverScreener: A Modeling Approach to Movie Screens Management, 18 MARKETING SCI. 352, 354-58 (1999) (offering a decision support system based on media industry data).
-
Sanjeev Swami et al., SilverScreener: A Modeling Approach to Movie Screens Management, 18 MARKETING SCI. 352, 354-58 (1999) (offering a decision support system based on media industry data).
-
-
-
-
102
-
-
45949105532
-
-
Both of these concerns can be seen as relating to the problem of obtaining relevant data to analyze and evaluate economic models of contract law.
-
Both of these concerns can be seen as relating to the problem of obtaining relevant data to analyze and evaluate economic models of contract law.
-
-
-
-
103
-
-
45949096561
-
-
For some helpful collections of this work, see CHOICES, VALUES, AND FRAMES (Daniel Kahneman & Amos Tversky eds., 2000),
-
For some helpful collections of this work, see CHOICES, VALUES, AND FRAMES (Daniel Kahneman & Amos Tversky eds., 2000),
-
-
-
-
104
-
-
45949104903
-
-
and JONATHAN BARON, THINKING AND DECIDING (2000).
-
and JONATHAN BARON, THINKING AND DECIDING (2000).
-
-
-
-
105
-
-
45949107823
-
-
See JUDGMENT UNDER UNCERTAINTY: HEURISTICS AND BIASES (Daniel Kahneman et al. eds., 1982) (arguing that people rely on heuristics as aids in decisionmaking). There are some examples of these ideas being applied in contract law.
-
See JUDGMENT UNDER UNCERTAINTY: HEURISTICS AND BIASES (Daniel Kahneman et al. eds., 1982) (arguing that people rely on heuristics as aids in decisionmaking). There are some examples of these ideas being applied in contract law.
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106
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See Melvin Aron Eisenberg, The Limits of Cognition and the Limits of Contract, 47 STAN. L. REV. 211, 225-48 (1995) (exploring links between cognitive bias and contractual decisions across wide range of issues, including liquidated damages, form contracts, and express conditions);
-
See Melvin Aron Eisenberg, The Limits of Cognition and the Limits of Contract, 47 STAN. L. REV. 211, 225-48 (1995) (exploring links between cognitive bias and contractual decisions across wide range of issues, including liquidated damages, form contracts, and express conditions);
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107
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0347740316
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Robert A. Hillman, The Limits of Behavioral Decision Theory in Legal Analysis: The Case of Liquidated Damages, 85 CORNELL L. REV. 717, 718-19 (2000) (describing various forms of cognitive bias and using this work to inform judicial treatment of liquidated-damages provisions in contract law);
-
Robert A. Hillman, The Limits of Behavioral Decision Theory in Legal Analysis: The Case of Liquidated Damages, 85 CORNELL L. REV. 717, 718-19 (2000) (describing various forms of cognitive bias and using this work to inform judicial treatment of liquidated-damages provisions in contract law);
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108
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0742271634
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Bounded Rationality, Standard Form Contracts, and Unconscionability, 70
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examining impact of cognitive bias on unconscionability doctrine
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Russell Korobkin, Bounded Rationality, Standard Form Contracts, and Unconscionability, 70 U. CHI. L. REV. 1203, 1255-78 (2003) (examining impact of cognitive bias on unconscionability doctrine).
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Korobkin, R.1
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109
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See, for example, BARRY SCHWARTZ, THE PARADOX OF CHOICE: WHY MORE IS LESS 1-6 (2004), bemoaning modern-day anxieties such as choosing a pair of jeans at clothing retailer The Gap: I just want regular jeans. You know, the kind that used to be the only kind.
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See, for example, BARRY SCHWARTZ, THE PARADOX OF CHOICE: WHY MORE IS LESS 1-6 (2004), bemoaning modern-day anxieties such as choosing a pair of jeans at clothing retailer The Gap: "I just want regular jeans. You know, the kind that used to be the only kind."
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110
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See, e.g., Naresh K. Malhotra, Reflections on the Information Overload Paradigm in Consumer Decision Making, 10 J. CONSUMER RES. 436, 437 (1984) ([L]imited processing capacity can become cognitively overloaded if [consumers] attempt to process 'too much' information in a limited time, and this can result in confusion, cognitive strain, and other dysfunctional consequences.).
-
See, e.g., Naresh K. Malhotra, Reflections on the Information Overload Paradigm in Consumer Decision Making, 10 J. CONSUMER RES. 436, 437 (1984) ("[L]imited processing capacity can become cognitively overloaded if [consumers] attempt to process 'too much' information in a limited time, and this can result in confusion, cognitive strain, and other dysfunctional consequences.").
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111
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0005369389
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The Irrelevance of Information Overload: An Analysis of Search and Disclosure, 59
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arguing that consumers are more likely to satisfice than to freeze up, See
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See David M. Grether et al., The Irrelevance of Information Overload: An Analysis of Search and Disclosure, 59 S. CAL. L. REV. 277, 279 (1986) (arguing that consumers are more likely to "satisfice" than to freeze up);
-
(1986)
S. CAL. L. REV
, vol.277
, pp. 279
-
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Grether, D.M.1
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112
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5844220217
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Error and Rationality in Individual Decisionmaking: An Essay on the Relationship Between Cognitive Illusions and the Management of Choices, 59
-
T]he traditional model of rational choice remains a useful norm for evaluating consumer behavior in market settings
-
Robert E. Scott, Error and Rationality in Individual Decisionmaking: An Essay on the Relationship Between Cognitive Illusions and the Management of Choices, 59 S. CAL. L. REV. 329, 331 (1986) ("[T]he traditional model of rational choice remains a useful norm for evaluating consumer behavior in market settings.").
-
(1986)
S. CAL. L. REV
, vol.329
, pp. 331
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Scott, R.E.1
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115
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50249108027
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For more on the difference between structured and unstructured information, see, Sept, at
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For more on the difference between structured and unstructured information, see Geoffrey Weglarz, Two Worlds of Data - Unstructured and Structured, DM REV., Sept. 2004, at 19, 19.
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(2004)
Two Worlds of Data - Unstructured and Structured, DM REV
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Weglarz, G.1
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116
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See infra Part II.C.2.
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See infra Part II.C.2.
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117
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Xerox's Strategy Pays Off with a New Search Venture
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describing recent advances in search algorithms, See, e.g, Feb. 9, at
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See, e.g., Miguel Helft, Xerox's Strategy Pays Off with a New Search Venture, N.Y. TIMES, Feb. 9, 2007, at C3 (describing recent advances in search algorithms);
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(2007)
N.Y. TIMES
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Helft, M.1
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118
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13244295841
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Javed Mostafa, Seeking Better Web Searches, SCI. AM., Feb. 2005, at 66, 67 (same).
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Javed Mostafa, Seeking Better Web Searches, SCI. AM., Feb. 2005, at 66, 67 (same).
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119
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The two disciplines can be distinguished, however. See infra notes 86-87 and accompanying text.
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The two disciplines can be distinguished, however. See infra notes 86-87 and accompanying text.
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120
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JOHN BATTELLE, THE SEARCH: HOW GOOGLE AND ITS RIVALS REWROTE THE RULES OF BUSINESS AND TRANSFORMED OUR CULTURE 39-41 (2005).
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JOHN BATTELLE, THE SEARCH: HOW GOOGLE AND ITS RIVALS REWROTE THE RULES OF BUSINESS AND TRANSFORMED OUR CULTURE 39-41 (2005).
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AltaVista and Excite were two pioneers in this type of search technology. Notably, Excite conducted statistical analysis of word relationships to evaluate a webpage's underlying concepts. Id. at 45-47, 55.
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AltaVista and Excite were two pioneers in this type of search technology. Notably, Excite conducted statistical analysis of word relationships to evaluate a webpage's underlying concepts. Id. at 45-47, 55.
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As search expert John Battelle describes, spammers . . . could capture traffic for high-traffic keywords like 'cars' by hiding those keywords all over their sites (often in small white letters on a white background . . . ). Id. at 104.
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As search expert John Battelle describes, "spammers . . . could capture traffic for high-traffic keywords like 'cars' by hiding those keywords all over their sites (often in small white letters on a white background . . . )." Id. at 104.
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Id. at 53-54
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Id. at 53-54.
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See Sergey Brin & Lawrence Page, The Anatomy of a Large-Scale Hypertextual Web Search Engine (1998), http://infolab.stanford.edu/~backrub/ google.html (explaining concepts of PageRank and other components of original Google search algorithm).
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See Sergey Brin & Lawrence Page, The Anatomy of a Large-Scale Hypertextual Web Search Engine (1998), http://infolab.stanford.edu/~backrub/ google.html (explaining concepts of PageRank and other components of original Google search algorithm).
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PageRank is just one of many different algorithms used by Google to determine search relevancy, but the firm maintains that PageRank continues to play a central role in many of [its] web search tools. Our Search: Google Technology, http://www.google.com/technology/ (last visited Jan. 28, 2008).
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PageRank is just one of many different algorithms used by Google to determine search relevancy, but the firm maintains that PageRank continues to "play a central role in many of [its] web search tools." Our Search: Google Technology, http://www.google.com/technology/ (last visited Jan. 28, 2008).
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BATTELLE, supra note 79, at 69-76 (describing history of and rationale for PageRank algorithm, Brin & Page, supra note 83 (explaining that PageRank does not count all links equally in approximating page importance, This description is a slight simplification of the PageRank algorithm, but the main focus is on the number and quality of inbound links. For example, after setting up a webpage, I might wonder, How many people link to my site? Before Google, there was no way to know the answer. But with access to Google's internal data, I can now find out because Google has crawled the entire web to determine who is linking to each site. Furthermore, Google assigns weights to the linking sites based, again, on the number of links coming in to those sites. So my high school friend's website linking to my site might get a low hypothetical score of 10 if no one links to him, my home city newspaper's website linking to my site might garner a score of 10
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BATTELLE, supra note 79, at 69-76 (describing history of and rationale for PageRank algorithm); Brin & Page, supra note 83 (explaining that PageRank does not count all links equally in approximating page importance). This description is a slight simplification of the PageRank algorithm, but the main focus is on the number and quality of inbound links. For example, after setting up a webpage, I might wonder, "How many people link to my site?" Before Google, there was no way to know the answer. But with access to Google's internal data, I can now find out because Google has crawled the entire web to determine who is linking to each site. Furthermore, Google assigns weights to the linking sites based, again, on the number of links coming in to those sites. So my high school friend's website linking to my site might get a low hypothetical score of 10 (if no one links to him), my home city newspaper's website linking to my site might garner a score of 1000, and the U.S. Supreme Court's website linking to my site might earn an additional score of 10,000. My total score of 11,010 could then be compared to the scores of all other sites dealing with, say, contract law, and the results would be served up in ranked order (after any paid search ads) to an interested searcher.
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Of course, the Google search system has also produced a cottage industry dedicated to farming links and using other methods to boost a site's PageRank score, which is one reason why Google constantly updates its algorithms to exclude certain parts of the Internet. See BATTELLE, supra note 79, at 156-63 describing growth of both optimization industry and search-engine marketing and noting Google's responses
-
Of course, the Google search system has also produced a cottage industry dedicated to farming links and using other methods to boost a site's PageRank score, which is one reason why Google constantly updates its algorithms to exclude certain parts of the Internet. See BATTELLE, supra note 79, at 156-63 (describing growth of both optimization industry and search-engine marketing and noting Google's responses).
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As an aside, there is a very interesting research (and perhaps business) opportunity involving the Googleization of all U.S. published court opinions and legal scholarship. As discussed above, Google's PageRank algorithm relies on linked citations, and on the relative importance of the citing source, to return the most relevant pages for a given keyword. Intriguingly, this is the same format used in case law: Court opinions cite (or link) to one another to support their claims, and the linking opinions are then cited with differing frequency in support of various legal doctrines. Thus, it should be possible to create a program that crawls the entire digital collection of published court opinions and uses Google's algorithm to calculate a CaseRank for each case. This would allow scholars, practicing lawyers, or other researchers to type in search keywords and, presumably, retrieve the most relevant and authoritative cases on point although the accuracy of the
-
As an aside, there is a very interesting research (and perhaps business) opportunity involving the "Googleization" of all U.S. published court opinions and legal scholarship. As discussed above, Google's PageRank algorithm relies on linked citations - and on the relative importance of the citing source - to return the most relevant pages for a given keyword. Intriguingly, this is the same format used in case law: Court opinions cite (or link) to one another to support their claims, and the linking opinions are then cited with differing frequency in support of various legal doctrines. Thus, it should be possible to create a program that crawls the entire digital collection of published court opinions and uses Google's algorithm to calculate a "CaseRank" for each case. This would allow scholars, practicing lawyers, or other researchers to type in search keywords and, presumably, retrieve the most relevant and authoritative cases on point (although the accuracy of the search results is an empirical question that would need to be tested). I will present some similar ideas infra Part III.A, but Googleization is different because it relies on the networked web of legal citations instead of on the use of meaning-based computing to "understand" and cluster court opinions. Either approach is likely to be better than our current, awkward framework for legal research.
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For example, Google offers a corporate appliance in which its search technology queries and retrieves organizational information from multiple business applications. See Google Enterprise: Google Search Appliance, http://www.google.com/enterprise/gsa/#utm_medium=et&utm_source= bizsols&utm_campaign=gsa (last visited Jan. 28, 2008) (describing Google's corporate appliance).
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For example, Google offers a corporate appliance in which its search technology queries and retrieves organizational information from multiple business applications. See Google Enterprise: Google Search Appliance, http://www.google.com/enterprise/gsa/#utm_medium=et&utm_source= bizsols&utm_campaign=gsa (last visited Jan. 28, 2008) (describing Google's corporate appliance).
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One leader in this area is a British firm named Autonomy, founded by Cambridge graduate Michael Lynch. See Autonomy's Board of Directors, http://www.autonomy.com/content/Autonomy/Management/index.en.html (last visited Jan. 23, 2008) (describing Lynch's background);
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One leader in this area is a British firm named Autonomy, founded by Cambridge graduate Michael Lynch. See Autonomy's Board of Directors, http://www.autonomy.com/content/Autonomy/Management/index.en.html (last visited Jan. 23, 2008) (describing Lynch's background);
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see also Business by Numbers: Algorithms, ECONOMIST, Sept. 15, 2007, at 94, 94 (quoting Lynch in story on increasing use of algorithms by consumers and corporations to make sense of unstructured data). Some of the discussion in this section comes from an analysis of Autonomy's technological algorithms.
-
see also Business by Numbers: Algorithms, ECONOMIST, Sept. 15, 2007, at 94, 94 (quoting Lynch in story on increasing use of algorithms by consumers and corporations to make sense of unstructured data). Some of the discussion in this section comes from an analysis of Autonomy's technological algorithms.
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See, e.g., AUTONOMY SYS. LTD., TECHNOLOGY WHITE PAPER 3-7, http://www.autonomy.com/ content/downloads/White%20Papers/index.en.html (outlining Autonomy's technologies). The Xerox Palo Alto Research Center lab is also researching technology for natural-language information retrieval. Helft, supra note 77 (discussing Xerox's business strategy in researching natural-language search technology). Oracle Corporation's purchase of Hyperion Solutions signals its eagerness to compete in this space.
-
See, e.g., AUTONOMY SYS. LTD., TECHNOLOGY WHITE PAPER 3-7, http://www.autonomy.com/ content/downloads/White%20Papers/index.en.html (outlining Autonomy's technologies). The Xerox Palo Alto Research Center lab is also researching technology for natural-language information retrieval. Helft, supra note 77 (discussing Xerox's business strategy in researching natural-language search technology). Oracle Corporation's purchase of Hyperion Solutions signals its eagerness to compete in this space.
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See Vauhini Vara, Oracle Adds Business-Intelligence Firm Hyperion, WALL ST. J., Mar. 2, 2007, at B3 (describing Oracle's acquisition of Hyperion as part of strategy of snapping up players in fast-growing niches like business-intelligence software). And Microsoft, perhaps not surprisingly, also has some dogs in the fight. See Mostafa, supra note 77, at 70 (noting rumors of Microsoft's planned release of implicit speech function).
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See Vauhini Vara, Oracle Adds Business-Intelligence Firm Hyperion, WALL ST. J., Mar. 2, 2007, at B3 (describing Oracle's acquisition of Hyperion as part of strategy of "snapping up players in fast-growing niches" like business-intelligence software). And Microsoft, perhaps not surprisingly, also has some dogs in the fight. See Mostafa, supra note 77, at 70 (noting rumors of Microsoft's planned release of implicit speech function).
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A Mathematical Theory of Communication (pts. 1 & 2), 27
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C.E. Shannon, A Mathematical Theory of Communication (pts. 1 & 2), 27 BELL SYS. TECH. J. 379, 623 (1948).
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, vol.379
, pp. 623
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Shannon, C.E.1
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135
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45949107224
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L. DAVID RITCHIE, COMMUNICATION CONCEPTS 2: INFORMATION 7 (Steven H. Chaffee ed., 1991) (describing influence of Shannon's essay). Shannon's work has appeared less frequently in legal scholarship, although some creative articles address it.
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L. DAVID RITCHIE, COMMUNICATION CONCEPTS 2: INFORMATION 7 (Steven H. Chaffee ed., 1991) (describing influence of Shannon's essay). Shannon's work has appeared less frequently in legal scholarship, although some creative articles address it.
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See, e.g., Alan L. Durham, Copyright and Information Theory: Toward an Alternative Model of Authorship, 2004 BYU L. REV. 69, 73-92,111-23 (using information theory to offer alternative conception of authorship in copyright law);
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See, e.g., Alan L. Durham, Copyright and Information Theory: Toward an Alternative Model of "Authorship," 2004 BYU L. REV. 69, 73-92,111-23 (using information theory to offer alternative conception of authorship in copyright law);
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Paul H. Edelman, The Dimension of the Supreme Court, 20 CONST. COMMENT 557, 557-63 (2003) (reviewing use of information theory to analyze voting patterns on second Rehnquist Court).
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Paul H. Edelman, The Dimension of the Supreme Court, 20 CONST. COMMENT 557, 557-63 (2003) (reviewing use of information theory to analyze voting patterns on second Rehnquist Court).
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Figure 1 is adapted from the diagram used in CLAUDE E. SHANNON & WARREN WEAVER, THE MATHEMATICAL THEORY OF COMMUNICATION 34 fig.1 (1964).
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Figure 1 is adapted from the diagram used in CLAUDE E. SHANNON & WARREN WEAVER, THE MATHEMATICAL THEORY OF COMMUNICATION 34 fig.1 (1964).
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This channel might consist of a phone line, but it could also refer to letters on a piece of paper, laser signals in an optical network, or any other medium for sending a message. See Durham, supra note 90, at 75 discussing encoded symbols
-
This channel might consist of a phone line, but it could also refer to letters on a piece of paper, laser signals in an optical network, or any other medium for sending a message. See Durham, supra note 90, at 75 (discussing encoded symbols).
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Id. at 74-76
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Id. at 74-76.
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SHANNON & WEAVER, supra note 91, at 51. For further discussion of this insight, see Durham, supra note 90, at 73-92.
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SHANNON & WEAVER, supra note 91, at 51. For further discussion of this insight, see Durham, supra note 90, at 73-92.
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SHANNON & WEAVER, supra note 91, at 48-53
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SHANNON & WEAVER, supra note 91, at 48-53.
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Durham, supra note 90, at 76-81
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Durham, supra note 90, at 76-81.
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This would need to be determined in the overall context of the body of information under analysis
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This would need to be determined in the overall context of the body of information under analysis.
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To take a related example, Amazon.com employs technology to identify statistically improbable phrases that may convey a sense of a book's subject matter. See Amazon.com Statistically Improbable Phrases, http://www.amazon.com/gp/search-inside/sipshelp.html (last visited Jan. 23, 2008) (discussing process by which statistically improbable phrases are identified).
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To take a related example, Amazon.com employs technology to identify "statistically improbable phrases" that may convey a sense of a book's subject matter. See Amazon.com Statistically Improbable Phrases, http://www.amazon.com/gp/search-inside/sipshelp.html (last visited Jan. 23, 2008) (discussing process by which "statistically improbable phrases" are identified).
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Another problem arises when there are no rare words in a search phrase. BATTELLE, supra note 79, at 24.
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Another problem arises when there are no rare words in a search phrase. BATTELLE, supra note 79, at 24.
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147
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For more background on Bayesian inference, see ANDREW GELMAN ET AL., BAYESIAN DATA ANALYSIS (2d ed. 2004), and Ulen, supra note 12, at 888-93.
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For more background on Bayesian inference, see ANDREW GELMAN ET AL., BAYESIAN DATA ANALYSIS (2d ed. 2004), and Ulen, supra note 12, at 888-93.
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Naturalized Epistemology and the Law of Evidence, 87
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Naturalized epistemology, recommends considerable skepticism about Bayesianism for thinking seriously about evidence, See, e.g
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See, e.g., Ronald J. Allen & Brian Leiter, Naturalized Epistemology and the Law of Evidence, 87 VA. L. REV. 1491, 1507-10 (2001) ("Naturalized epistemology . . . recommends considerable skepticism about Bayesianism for thinking seriously about evidence.");
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(2001)
VA. L. REV
, vol.1491
, pp. 1507-1510
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Allen, R.J.1
Leiter, B.2
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149
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The Problematic Value of Mathematical Models of Evidence, 36
-
discussing epistemological limitations of mathematical models of evidence
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Ronald J. Allen & Michael S. Pardo, The Problematic Value of Mathematical Models of Evidence, 36 J. LEGAL STUD. 107, 114-28 (2007) (discussing epistemological limitations of mathematical models of evidence);
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(2007)
J. LEGAL STUD
, vol.107
, pp. 114-128
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Allen, R.J.1
Pardo, M.S.2
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150
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45949090026
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Roger C. Park & Michael J. Saks, Evidence Scholarship Reconsidered: Results of the Interdisciplinary Turn, 47 B.C. L. REV. 949, 988-95 (2006) (summarizing views of Bayesian skeptics and enthusiasts regarding evidence law).
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Roger C. Park & Michael J. Saks, Evidence Scholarship Reconsidered: Results of the Interdisciplinary Turn, 47 B.C. L. REV. 949, 988-95 (2006) (summarizing views of Bayesian "skeptics and enthusiasts" regarding evidence law).
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45949106331
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See AUTONOMY SYS. LTD., supra note 88, at 4-5 (explaining Bayesian inference).
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See AUTONOMY SYS. LTD., supra note 88, at 4-5 (explaining Bayesian inference).
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These numbers are merely illustrative; I have no idea how often bowl refers to each of these three concepts.
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These numbers are merely illustrative; I have no idea how often "bowl" refers to each of these three concepts.
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There is, however, a potential concern with using meaning-based technology to build a search engine in an open universe like the Internet: Because there are commercial incentives to attract attention, spammers may again seek to undermine the algorithm by hiding irrelevant keywords throughout a webpage. Fortunately, I suspect that this problem is less likely to emerge in the analysis of information related to contract law
-
There is, however, a potential concern with using meaning-based technology to build a search engine in an open universe like the Internet: Because there are commercial incentives to attract attention, spammers may again seek to undermine the algorithm by hiding irrelevant keywords throughout a webpage. Fortunately, I suspect that this problem is less likely to emerge in the analysis of information related to contract law.
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Several recent Microsoft projects (codenamed Stuff I've Seen, PowerScout, and Watson) seek to accomplish this type of implicit search. Mostafa, supra note 77, at 70
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Several recent Microsoft projects (codenamed "Stuff I've Seen," "PowerScout," and "Watson") seek to accomplish this type of implicit search. Mostafa, supra note 77, at 70.
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sources cited supra
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See sources cited supra notes 19, 88.
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notes
, vol.19
, pp. 88
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156
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45949102374
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See AUTONOMY SYS. LTD., supra note 88, at 26-28 (describing some limitations of keyword searching and Boolean query).
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See AUTONOMY SYS. LTD., supra note 88, at 26-28 (describing some limitations of keyword searching and Boolean query).
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Technology standards such as XML facilitate this sort of information tagging
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Technology standards such as XML facilitate this sort of information tagging.
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Part IV
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See infra Part IV.
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See infra
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notes 56-58 and accompanying text
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See supra notes 56-58 and accompanying text.
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See supra
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For example, the ONECLE database, described supra note 57, lumps several thousand service contracts into a single group. Within this cluster are contracts as diverse as a large business outsourcing project, a small website development contract, and a telecomservices arrangement. See, e.g., Framework Agreement Between BP Amoco PLC and Exult, Inc. (Dec. 7, 1999), http://contracts.onecle.com/exult/bpamoco.svc.1999.12.07.shtml (last visited Jan. 8, 2008) (business outsourcing contract);
-
For example, the ONECLE database, described supra note 57, lumps several thousand service contracts into a single group. Within this cluster are contracts as diverse as a large business outsourcing project, a small website development contract, and a telecomservices arrangement. See, e.g., Framework Agreement Between BP Amoco PLC and Exult, Inc. (Dec. 7, 1999), http://contracts.onecle.com/exult/bpamoco.svc.1999.12.07.shtml (last visited Jan. 8, 2008) (business outsourcing contract);
-
-
-
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161
-
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45949105685
-
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Website Services Agreement Between iVillage, Inc. and Hearst Communications, Inc. (Dec. 19, 2003), http://contracts.onecle.com/ivillage/ hearst.svc.2003.12.19.shtml (last visited Jan. 8, 2008) (website development contract);
-
Website Services Agreement Between iVillage, Inc. and Hearst Communications, Inc. (Dec. 19, 2003), http://contracts.onecle.com/ivillage/ hearst.svc.2003.12.19.shtml (last visited Jan. 8, 2008) (website development contract);
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162
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45949111030
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SynchroNet Service Agreement Between Southern/South Central Bell Telephone Company and Intercept Systems, Inc, last visited Jan. 8, 2008, telecom-services contract
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SynchroNet Service Agreement Between Southern/South Central Bell Telephone Company and Intercept Systems, Inc., http://contracts.onecle.com/ intercept/bellsouth.svc-synchronet.shtml (last visited Jan. 8, 2008) (telecom-services contract).
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163
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0742271491
-
Mistake in Contract Law, 91
-
analyzing cases to present functional approach to mistake doctrine, E.g
-
E.g., Melvin A. Eisenberg, Mistake in Contract Law, 91 CAL. L. REV. 1573, 1576-78 (2003) (analyzing cases to present functional approach to mistake doctrine).
-
(2003)
CAL. L. REV
, vol.1573
, pp. 1576-1578
-
-
Eisenberg, M.A.1
-
164
-
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45949108146
-
-
One example of this is Farnsworth's derivation of a dependence principle in contract law. See E. ALLAN FARNSWORTH, CHANGING YOUR MIND: THE LAW OF REGRETTED DECISIONS 89-96 (1998) (examining distinction between dependence based on promise and dependence based on conduct).
-
One example of this is Farnsworth's derivation of a " dependence" principle in contract law. See E. ALLAN FARNSWORTH, CHANGING YOUR MIND: THE LAW OF REGRETTED DECISIONS 89-96 (1998) (examining distinction between dependence based on promise and dependence based on conduct).
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165
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45949102867
-
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For example, there is a potential problem with selection bias because the analysis is based only on the results of decided and published cases. All data on settled or unpublished disputes are excluded by necessity, even though inclusion of this information might change the results. Cf. Epstein & King, Rules of Inference, supra note 12, at 110-12 describing how selection of which cases to study automatically introduces bias into analysis
-
For example, there is a potential problem with selection bias because the analysis is based only on the results of decided and published cases. All data on settled or unpublished disputes are excluded by necessity - even though inclusion of this information might change the results. Cf. Epstein & King, Rules of Inference, supra note 12, at 110-12 (describing how selection of which cases to study automatically introduces bias into analysis).
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166
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45949096582
-
-
See Craswell, supra note 10, at 904-07 (discussing decline of descriptive hypotheses in law and economics); Posner, supra note 16, at 877-78 (considering whether scholars should return to doctrinal analysis).
-
See Craswell, supra note 10, at 904-07 (discussing decline of descriptive hypotheses in law and economics); Posner, supra note 16, at 877-78 (considering whether scholars should return to doctrinal analysis).
-
-
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167
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45949085351
-
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As Craswell puts it, it is hard to find a useful null hypothesis to test empirically with descriptive analysis. Craswell, supra note 10, at 905-06.
-
As Craswell puts it, it is hard to find a useful null hypothesis to test empirically with descriptive analysis. Craswell, supra note 10, at 905-06.
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168
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45949098718
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Scott, supra note 42, at 1652-53
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Scott, supra note 42, at 1652-53.
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169
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45949111349
-
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Id. at 1659 (discussing cases in which courts have invalidated agreements due to indefiniteness).
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Id. at 1659 (discussing cases in which courts have invalidated agreements due to indefiniteness).
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170
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45949110397
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Id. at 1653
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Id. at 1653.
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171
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45949095018
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Scott's hypothesis is that some parties may be motivated by a behavioral sense of reciprocal fairness and that an ambiguous agreement can serve as a type of signal. Id. at 1660-63.
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Scott's hypothesis is that some parties may be motivated by a behavioral sense of reciprocal fairness and that an ambiguous agreement can serve as a type of signal. Id. at 1660-63.
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172
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45949084294
-
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Stephen A. Smith, Taking Law Seriously, 50 U. TORONTO L.J. 241, 249 (2000).
-
Stephen A. Smith, Taking Law Seriously, 50 U. TORONTO L.J. 241, 249 (2000).
-
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173
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45949095307
-
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For example, a recent Westlaw search for the phrase contract in the ALLCASES database for every state and federal opinion in the past ninety days located 7897 results as of February 2, 2008.
-
For example, a recent Westlaw search for the phrase "contract" in the ALLCASES database for every state and federal opinion in the past ninety days located 7897 results as of February 2, 2008.
-
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174
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45949095019
-
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Westlaw Key numbers organize cases by general and specific legal topics
-
Westlaw Key numbers organize cases by general and specific legal topics.
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175
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45949110398
-
-
Specifically, Scott used Westlaw's 95k9(1) database: Contracts: Requisites and Validity: Nature and Essentials in General: Certainty as to Subject Matter: In General. He then chose a random subset of these cases in order to construct a manageable dataset. Scott, supra note 42, at 1652-53.
-
Specifically, Scott used Westlaw's 95k9(1) database: "Contracts: Requisites and Validity: Nature and Essentials in General: Certainty as to Subject Matter: In General." He then chose a random subset of these cases in order to construct a manageable dataset. Scott, supra note 42, at 1652-53.
-
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176
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45949108440
-
-
This concern is less important for Scott's claim that a meaningful number of courts still use the indefiniteness doctrine, which his analysis clearly demonstrates. See id, discussing results of search for use of indefiniteness doctrine by courts, But missing cases would be potentially more damaging to any work asserting a more comprehensive claim on the exact contours of a rule in contract law
-
This concern is less important for Scott's claim that a meaningful number of courts still use the indefiniteness doctrine, which his analysis clearly demonstrates. See id. (discussing results of search for use of indefiniteness doctrine by courts). But missing cases would be potentially more damaging to any work asserting a more comprehensive claim on the exact contours of a rule in contract law.
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177
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45949083212
-
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Taking this idea to its extreme, researchers might conceivably scan every single court opinion ever published in the United States with a meaning-based computing algorithm to look for interesting connections across disciplines
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Taking this idea to its extreme, researchers might conceivably scan every single court opinion ever published in the United States with a meaning-based computing algorithm to look for interesting connections across disciplines.
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178
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45949094077
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By teaching, I mean updating the Bayesian networks that reflect the strength of links between words and concepts (either through human understanding and intervention or through automated review of additional, related content, Many knowledge-management programs allow users to tune systems in this manner. See, e.g, AUTONOMY SYS. LTD, supra note 88, at 24 describing learning capabilities of knowledge-management software, For example, after scanning all court opinions on contract law, I might tell the computer that consideration is less likely to be associated with kindness and more likely to involve bargained-for contractual requirements of detriment and benefit. Or, even better, I might scan several dozen casebooks and treatises on the topic and use this information to retroactively update the Bayesian linkages between words and concepts in the case database
-
By "teaching," I mean updating the Bayesian networks that reflect the strength of links between words and concepts (either through human understanding and intervention or through automated review of additional, related content). Many knowledge-management programs allow users to tune systems in this manner. See, e.g., AUTONOMY SYS. LTD., supra note 88, at 24 (describing "learning" capabilities of knowledge-management software). For example, after scanning all court opinions on contract law, I might tell the computer that "consideration" is less likely to be associated with "kindness" and more likely to involve bargained-for contractual requirements of detriment and benefit. Or, even better, I might scan several dozen casebooks and treatises on the topic and use this information to retroactively update the Bayesian linkages between words and concepts in the case database.
-
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179
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45949097356
-
-
I borrow here from Scott's musings on the topic. See Scott, supra note 42, at 1659 ([T]he indefiniteness was endogenous to the contract, and the courts appear to infer from that fact that the parties either do not intend or do not deserve legal enforcement.).
-
I borrow here from Scott's musings on the topic. See Scott, supra note 42, at 1659 ("[T]he indefiniteness was endogenous to the contract, and the courts appear to infer from that fact that the parties either do not intend or do not deserve legal enforcement.").
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180
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45949085640
-
-
Procedural unconscionability represents a flaw in the bargaining process, while substantive unconscionability goes to the outrageousness of specific terms. E. ALLAN FARNSWORTH, CONTRACTS § 4.28 (4th ed. 2004).
-
Procedural unconscionability represents a flaw in the bargaining process, while substantive unconscionability goes to the outrageousness of specific terms. E. ALLAN FARNSWORTH, CONTRACTS § 4.28 (4th ed. 2004).
-
-
-
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181
-
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67651244927
-
Unconscionability and the Code - The Emperor's New Clause, 115
-
For the origins of the procedural/substantive distinction, see
-
For the origins of the procedural/substantive distinction, see Arthur Allen Leff, Unconscionability and the Code - The Emperor's New Clause, 115 U. PA. L. REV. 485, 489-93 (1967).
-
(1967)
U. PA. L. REV
, vol.485
, pp. 489-493
-
-
Allen Leff, A.1
-
182
-
-
45949098717
-
-
E.g., Maxwell v. Fid. Fin. Servs., 907 P.2d 51, 59 (Ariz. 1995) (holding that unconscionability can be established without procedural flaws but also recognizing that many courts require both).
-
E.g., Maxwell v. Fid. Fin. Servs., 907 P.2d 51, 59 (Ariz. 1995) (holding that unconscionability can be established without procedural flaws but also recognizing that many courts require both).
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-
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183
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45949103036
-
-
Other factors might include whether the contract involves a consumer or commercial transaction, the nature of the disputed term (price, an arbitration clause, or something else), and the term of the contract. For one recent study presenting some variables to consider, see DiMatteo & Rich, supra note 18, at 1093-94.
-
Other factors might include whether the contract involves a consumer or commercial transaction, the nature of the disputed term (price, an arbitration clause, or something else), and the term of the contract. For one recent study presenting some variables to consider, see DiMatteo & Rich, supra note 18, at 1093-94.
-
-
-
-
184
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45949102214
-
-
A recent study, for example, attempts this sort of exercise by coding unconscionability cases across ten different dimensions. While this is an impressive effort, the authors have almost certainly left out some important factors. See DiMatteo & Rich, supra note 18, app. A (listing factors considered). These factors include the ones mentioned above, see supra note 131 and accompanying text, along with whether the parties were represented by an attorney, whether other legal doctrines such as good faith and fraud were discussed, whether the contract involved goods, and a few other issues. DiMatteo & Rich, supra note 18, app. A.
-
A recent study, for example, attempts this sort of exercise by coding unconscionability cases across ten different dimensions. While this is an impressive effort, the authors have almost certainly left out some important factors. See DiMatteo & Rich, supra note 18, app. A (listing factors considered). These factors include the ones mentioned above, see supra note 131 and accompanying text, along with whether the parties were represented by an attorney, whether other legal doctrines such as good faith and fraud were discussed, whether the contract involved goods, and a few other issues. DiMatteo & Rich, supra note 18, app. A.
-
-
-
-
185
-
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45949103550
-
-
DiMatteo and Rich seek consistency by having two different coders analyze each case, and they arrive at an impressive ninety-three percent agreement rate. Id. at 1094. But how should the discrepancies be handled?
-
DiMatteo and Rich seek consistency by having two different coders analyze each case, and they arrive at an impressive ninety-three percent agreement rate. Id. at 1094. But how should the discrepancies be handled?
-
-
-
-
186
-
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45949084592
-
-
discussing failure to consider rival hypotheses and related problem of searching only for data to confirm, but not refute, given hypothesis, See, e.g, at
-
See, e.g., Epstein & King, Rules of Inference, supra note 12, at 76-80 (discussing failure to consider rival hypotheses and related problem of searching only for data to confirm, but not refute, given hypothesis).
-
Rules of Inference, supra note
, vol.12
, pp. 76-80
-
-
Epstein1
King2
-
187
-
-
84867080753
-
Promissory Estoppel and Traditional Contract Doctrine, 78
-
Stanley D. Henderson, Promissory Estoppel and Traditional Contract Doctrine, 78 YALE L.J. 343 (1969).
-
(1969)
YALE L.J
, vol.343
-
-
Henderson, S.D.1
-
188
-
-
45949108004
-
-
RESTATEMENT (SECOND) OF CONTRACTS § 90 (1981).
-
RESTATEMENT (SECOND) OF CONTRACTS § 90 (1981).
-
-
-
-
189
-
-
0347640456
-
-
Henderson, supra note 135, at 343-44. In other words, these older section 90 cases were often unwilling to enforce unilateral promises (without mutual consideration) even when they created the type of significant detrimental reliance contemplated by section 90. For further evaluation of Henderson's insights, showing that most promises upheld under section 90 involved commercial exchange, not gratuitous promises, see Ulen, supra note 12, at 902-05. For a discussion of the economics of promissory estoppel in which the author links the efficient normative use of promissory estoppel in prenegotiations to bargaining power, see Avery Katz, When Should an Offer Stick? The Economics of Promissory Estoppel in Preliminary Negotiations, 105 YALE L.J. 1249, 1253-59 1996
-
Henderson, supra note 135, at 343-44. In other words, these older section 90 cases were often unwilling to enforce unilateral promises (without mutual consideration) even when they created the type of significant detrimental reliance contemplated by section 90. For further evaluation of Henderson's insights, showing that most promises upheld under section 90 involved commercial exchange, not gratuitous promises, see Ulen, supra note 12, at 902-05. For a discussion of the economics of promissory estoppel in which the author links the efficient normative use of promissory estoppel in prenegotiations to bargaining power, see Avery Katz, When Should an Offer Stick? The Economics of Promissory Estoppel in Preliminary Negotiations, 105 YALE L.J. 1249, 1253-59 (1996).
-
-
-
-
190
-
-
45949107364
-
-
Daniel A. Farber & John H. Matheson, Beyond Promissory Estoppel: Contract Law and the Invisible Handshake, 52 U. CHI. L. REV. 903, 904-06 (1985) (surveying over two hundred cases and finding expanded judicial acceptance of promissory estoppel).
-
Daniel A. Farber & John H. Matheson, Beyond Promissory Estoppel: Contract Law and the "Invisible Handshake," 52 U. CHI. L. REV. 903, 904-06 (1985) (surveying over two hundred cases and finding expanded judicial acceptance of promissory estoppel).
-
-
-
-
191
-
-
45949090518
-
-
Id. at 904-05. More specifically, they argued that reliance was becoming less important in promissory estoppel claims and that estoppel was being used to enforce many promises that were made in furtherance of economic activity. Id. at 925-29.
-
Id. at 904-05. More specifically, they argued that reliance was becoming less important in promissory estoppel claims and that estoppel was being used to enforce many promises that were made in furtherance of economic activity. Id. at 925-29.
-
-
-
-
192
-
-
0347305946
-
-
Craswell suggests that one important variable in the judicial resolution of these cases is whether the promise is made under circumstances in which it would be efficient to engage in precontractual reliance. Richard Craswell, Offer, Acceptance, and Efficient Reliance, 48 STAN. L. REV. 481, 503-04 1996
-
Craswell suggests that one important variable in the judicial resolution of these cases is whether the promise is made under circumstances in which it would be efficient to engage in precontractual reliance. Richard Craswell, Offer, Acceptance, and Efficient Reliance, 48 STAN. L. REV. 481, 503-04 (1996).
-
-
-
-
193
-
-
0346935093
-
-
Hillman questions whether promissory estoppel has really changed much. See Robert A. Hillman, Questioning the New Consensus on Promissory Estoppel: An Empirical and Theoretical Study, 98 COLUM. L. REV. 580, 580-84 (1998) (finding that, contrary to new consensus, courts still consider reliance as substantive element of promissory estoppel).
-
Hillman questions whether promissory estoppel has really changed much. See Robert A. Hillman, Questioning the "New Consensus" on Promissory Estoppel: An Empirical and Theoretical Study, 98 COLUM. L. REV. 580, 580-84 (1998) (finding that, contrary to "new consensus," courts still consider reliance as substantive element of promissory estoppel).
-
-
-
-
194
-
-
45949097808
-
-
Eric Holmes suggests that the doctrine has gone through four evolutionary phases. Eric Mills Holmes, The Four Phases of Promissory Estoppel, 20 SEATTLE U. L. REV. 45, 49-51 (1996).
-
Eric Holmes suggests that the doctrine has gone through four evolutionary phases. Eric Mills Holmes, The Four Phases of Promissory Estoppel, 20 SEATTLE U. L. REV. 45, 49-51 (1996).
-
-
-
-
195
-
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45949094233
-
-
It might be powerful, for instance, to cluster contract cases with tort, property, or agency cases in order to look for previously undeveloped linkages in the common law. Or it might be useful to cross-check the various ways in which courts or agencies deal with key constitutional or administrative principles
-
It might be powerful, for instance, to cluster contract cases with tort, property, or agency cases in order to look for previously undeveloped linkages in the common law. Or it might be useful to cross-check the various ways in which courts or agencies deal with key constitutional or administrative principles.
-
-
-
-
196
-
-
45949093580
-
-
See, e.g., Richard Craswell, Contract Law, Default Rules, and the Philosophy of Promising, 88 MICH. L. REV. 489, 489-91 (1988) (defending economic approach as uniquely suited to offer fine-grained rules); Schwartz & Scott, supra note 27, at 550-56 (justifying efficiency theory of contract).
-
See, e.g., Richard Craswell, Contract Law, Default Rules, and the Philosophy of Promising, 88 MICH. L. REV. 489, 489-91 (1988) (defending economic approach as uniquely suited to offer fine-grained rules); Schwartz & Scott, supra note 27, at 550-56 (justifying efficiency theory of contract).
-
-
-
-
197
-
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45949111029
-
-
See, e.g., CHARLES FRIED, CONTRACT AS PROMISE: A THEORY OF CONTRACTUAL OBLIGATION 5-6, 74-85 (1981) (arguing that contract law should be guided by moral principles instead of social policies such as economic efficiency);
-
See, e.g., CHARLES FRIED, CONTRACT AS PROMISE: A THEORY OF CONTRACTUAL OBLIGATION 5-6, 74-85 (1981) (arguing that contract law should be guided by moral principles instead of social policies such as economic efficiency);
-
-
-
-
198
-
-
33846833905
-
The Divergence of Contract and Promise, 120
-
discussing areas where morality and contract law diverge and advancing theory designed to accommodate moral agency
-
Seana Valentine Shiffrin, The Divergence of Contract and Promise, 120 HARV. L. REV. 708, 729-39 (2007) (discussing areas where morality and contract law diverge and advancing theory designed to accommodate "moral agency").
-
(2007)
HARV. L. REV
, vol.708
, pp. 729-739
-
-
Valentine Shiffrin, S.1
-
199
-
-
45949112577
-
-
See Posner, supra note 16, at 855-59 discussing premises and objectives of incomplete-contracting theory
-
See Posner, supra note 16, at 855-59 (discussing premises and objectives of incomplete-contracting theory).
-
-
-
-
200
-
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45949098568
-
-
Id. at 856-58
-
Id. at 856-58.
-
-
-
-
201
-
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45949102538
-
-
Id. at 832-34 (setting out typical premises of legal approach to economic analysis).
-
Id. at 832-34 (setting out typical premises of legal approach to economic analysis).
-
-
-
-
202
-
-
45949099333
-
-
See Ian Ayres & Robert Gertner, Filling Gaps in Incomplete Contracts: An Economic Theory of Default Rules, 99 YALE L.J. 87, 87-91 (1989) (providing background on concept and theory of default rules).
-
See Ian Ayres & Robert Gertner, Filling Gaps in Incomplete Contracts: An Economic Theory of Default Rules, 99 YALE L.J. 87, 87-91 (1989) (providing background on concept and theory of default rules).
-
-
-
-
203
-
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45949108439
-
-
Posner, supra note 16, at 856
-
Posner, supra note 16, at 856.
-
-
-
-
204
-
-
45949090812
-
-
See A. MITCHELL POLINSKY, AN INTRODUCTION TO LAW AND ECONOMICS 32-35 (1983) (explaining concept of inefficient overreliance and when we can expect it to arise). These two goals can conflict. For instance, a remedy that fully compensates the buyer's valuation in the event of breach (thus giving the seller incentives to trade when efficient) may cause the buyer to ignore the probability of breach and subsequently overinvest. Posner, supra note 16, at 834-36, 856.
-
See A. MITCHELL POLINSKY, AN INTRODUCTION TO LAW AND ECONOMICS 32-35 (1983) (explaining concept of inefficient overreliance and when we can expect it to arise). These two goals can conflict. For instance, a remedy that fully compensates the buyer's valuation in the event of breach (thus giving the seller incentives to trade when efficient) may cause the buyer to ignore the probability of breach and subsequently overinvest. Posner, supra note 16, at 834-36, 856.
-
-
-
-
205
-
-
45949107824
-
-
See generally PATRICK BOLTON & MATHIAS DEWATRIPONT, CONTRACT THEORY 489-641 (2005) (aggregating and analyzing work in this area under wide range of contexts);
-
See generally PATRICK BOLTON & MATHIAS DEWATRIPONT, CONTRACT THEORY 489-641 (2005) (aggregating and analyzing work in this area under wide range of contexts);
-
-
-
-
206
-
-
0001668625
-
Renegotiation Design with Unverifiable Information, 62
-
analyzing how possibility of ex post renegotiation affects design of original contract
-
Philippe Aghion et al, Renegotiation Design with Unverifiable Information, 62 ECONOMETRICA 257 (1994) (analyzing how possibility of ex post renegotiation affects design of original contract);
-
(1994)
ECONOMETRICA
, vol.257
-
-
Aghion, P.1
-
207
-
-
0001202406
-
Incomplete Contracts and Renegotiation, 56
-
suggesting that communication and renegotiation between parties can result in optimal contract
-
Oliver Hart & John Moore, Incomplete Contracts and Renegotiation, 56 ECONOMETRICA 755 (1988) (suggesting that communication and renegotiation between parties can result in optimal contract);
-
(1988)
ECONOMETRICA
, vol.755
-
-
Hart, O.1
Moore, J.2
-
208
-
-
85077581788
-
Option Contracts and Renegotiation: A Solution to the Hold-Up Problem, 26
-
exploring use of option contracts to overcome underinvestment problem
-
Georg Noldeke & Klaus M. Schmidt, Option Contracts and Renegotiation: A Solution to the Hold-Up Problem, 26 RAND J. ECON. 163 (1995) (exploring use of option contracts to overcome underinvestment problem).
-
(1995)
RAND J. ECON
, vol.163
-
-
Noldeke, G.1
Schmidt, K.M.2
-
209
-
-
45949102871
-
-
Posner, supra note 16, at 857
-
Posner, supra note 16, at 857.
-
-
-
-
210
-
-
45949101542
-
-
Id
-
Id.
-
-
-
-
211
-
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45949103703
-
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Id. at 857-58
-
Id. at 857-58.
-
-
-
-
212
-
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45949102215
-
-
For a recent collection of work in this area, see BOLTON & DEWATRIPONT, supra note 150, at 489-641
-
For a recent collection of work in this area, see BOLTON & DEWATRIPONT, supra note 150, at 489-641.
-
-
-
-
213
-
-
45949086114
-
-
See, e.g., Robert E. Scott & George G. Triantis, Incomplete Contracts and the Theory of Contract Design, 56 CASE W. RES. L. REV. 187, 188-95 (2005) (relating incomplete- contracting literature to contract law and judicial enforcement of terms). Some legal scholars have argued as much for certain groups of contracting parties. See Schwartz & Scott, supra note 27, at 549-50 (arguing that courts should usually enforce contracts between sophisticated economic actors as written).
-
See, e.g., Robert E. Scott & George G. Triantis, Incomplete Contracts and the Theory of Contract Design, 56 CASE W. RES. L. REV. 187, 188-95 (2005) (relating incomplete- contracting literature to contract law and judicial enforcement of terms). Some legal scholars have argued as much for certain groups of contracting parties. See Schwartz & Scott, supra note 27, at 549-50 (arguing that courts should usually enforce contracts between sophisticated economic actors as written).
-
-
-
-
214
-
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45949108769
-
-
See Posner, supra note 16, at 859 (The contracts that the models predict do not exist in the world.).
-
See Posner, supra note 16, at 859 ("The contracts that the models predict do not exist in the world.").
-
-
-
-
215
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45949108133
-
-
See, e.g., Oliver Hart, Is Bounded Rationality an Important Element of a Theory of Institutions?, 146 J. I NSTITUTIONAL & THEORETICAL ECON. 696, 700-01 (1990) (suggesting that bounded rationality is only way to explain why parties leave courts with discretion to fill contractual gaps);
-
See, e.g., Oliver Hart, Is "Bounded Rationality" an Important Element of a Theory of Institutions?, 146 J. I NSTITUTIONAL & THEORETICAL ECON. 696, 700-01 (1990) (suggesting that bounded rationality is only way to explain why parties leave courts with discretion to fill contractual gaps);
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216
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17944377188
-
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Eric Maskin & Jean Tirole, Unforeseen Contingencies and Incomplete Contracts, 66 REV. ECON. STUD. 83, 107-08 (1999) (questioning full rationality assumption). I will pick up on some concerns presented by bounded rationality and on some possible solutions through imperfect answers and predictive modeling infra Part III.C
-
Eric Maskin & Jean Tirole, Unforeseen Contingencies and Incomplete Contracts, 66 REV. ECON. STUD. 83, 107-08 (1999) (questioning full rationality assumption). I will pick up on some concerns presented by bounded rationality and on some possible solutions through imperfect answers and predictive modeling infra Part III.C
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217
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This self-help is typically executed via preferred-stock contracts and involves techniques like increasing board representation, manager stock vesting, liquidation preferences, and other procedural events that are often tied to manager performance. For further discussion of venture capital contracts, see Robert P. Bartlett III, Venture Capital, Agency Costs, and the False Dichotomy of the Corporation, 54 UCLA L. REV. 37 2006, Kaplan & Stromberg, supra note 47, at 2177-81
-
This self-help is typically executed via preferred-stock contracts and involves techniques like increasing board representation, manager stock vesting, liquidation preferences, and other procedural events that are often tied to manager performance. For further discussion of venture capital contracts, see Robert P. Bartlett III, Venture Capital, Agency Costs, and the False Dichotomy of the Corporation, 54 UCLA L. REV. 37 (2006), Kaplan & Stromberg, supra note 47, at 2177-81,
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218
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32244440000
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The Exit Structure of Venture Capital, 53
-
and D. Gordon Smith, The Exit Structure of Venture Capital, 53 UCLA L. REV. 315 (2005).
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UCLA L. REV
, vol.315
-
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Gordon Smith, D.1
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219
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34248579207
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For example, business-outsourcing contracts sometimes grant parties the procedural right to exit a long-term relationship by demonstrating inadequate service (for cause termination). Alternatively, a party may negotiate to end the deal for convenience by paying an exit fee. See George S. Geis, Business Outsourcing and the Agency Cost Problem, 82 NOTRE DAME L. REV. 955, 994-97 (2007) (discussing these procedural clauses in outsourcing context).
-
For example, business-outsourcing contracts sometimes grant parties the procedural right to exit a long-term relationship by demonstrating inadequate service ("for cause" termination). Alternatively, a party may negotiate to end the deal "for convenience" by paying an exit fee. See George S. Geis, Business Outsourcing and the Agency Cost Problem, 82 NOTRE DAME L. REV. 955, 994-97 (2007) (discussing these procedural clauses in outsourcing context).
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220
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notes 171-73 and accompanying text
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See infra notes 171-73 and accompanying text.
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See infra
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221
-
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45949101739
-
-
See Richard Craswell, Contract Law: General Theories, in 3 ENCYCLOPEDIA OF LAW AND ECONOMICS, supra note 26, § 4000, at 4-5 (describing general approach to precision in contract law default rules);
-
See Richard Craswell, Contract Law: General Theories, in 3 ENCYCLOPEDIA OF LAW AND ECONOMICS, supra note 26, § 4000, at 4-5 (describing general approach to precision in contract law default rules);
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222
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0345933523
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Preliminary Thoughts on Optimal Tailoring of Contractual Default Rules, 3
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explicitly analyzing default-rule precision problem in contract law
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Ian Ayres, Preliminary Thoughts on Optimal Tailoring of Contractual Default Rules, 3 S. CAL. INTERDISC. L.J. 1, 1, 9-15 (1993) (explicitly analyzing default-rule precision problem in contract law).
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(1993)
S. CAL. INTERDISC. L.J
, vol.1
, Issue.1
, pp. 9-15
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Ayres, I.1
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223
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It is an open question whether this subset should comprise a large or small portion of agreements made in our economy. Schwartz and Scott have argued, for example, that courts should take this exact approach for all agreements between commercially sophisticated entities. Schwartz & Scott, supra note 27, at 594-609.
-
It is an open question whether this subset should comprise a large or small portion of agreements made in our economy. Schwartz and Scott have argued, for example, that courts should take this exact approach for all agreements between commercially sophisticated entities. Schwartz & Scott, supra note 27, at 594-609.
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224
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45949084750
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See Ayres & Gertner, supra note 147, at 87-91 introducing theory of default rules
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See Ayres & Gertner, supra note 147, at 87-91 (introducing theory of default rules).
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225
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45949110247
-
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See U.C.C. § 2-307 (2005) (stating that, by default, goods must be delivered in single lots).
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See U.C.C. § 2-307 (2005) (stating that, by default, goods must be delivered in single lots).
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226
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Some commentators have argued, for example, that the Hadley default rule limiting unforeseeable consequential damages is often replaced by a rule prohibiting all consequential damages for breach, whether foreseeable or not. DOUGLAS G. BAIRD ET AL., GAME THEORY AND THE LAW 147 n.16 (1994);
-
Some commentators have argued, for example, that the Hadley default rule limiting unforeseeable consequential damages is often replaced by a rule prohibiting all consequential damages for breach, whether foreseeable or not. DOUGLAS G. BAIRD ET AL., GAME THEORY AND THE LAW 147 n.16 (1994);
-
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227
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0346982697
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Beyond Foreseeability: Consequential Damages in the Law of Contract, 18
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discussing reasons why parties may want to avoid contracts altogether where breach triggers liability for consequential damages, see also
-
see also Richard A. Epstein, Beyond Foreseeability: Consequential Damages in the Law of Contract, 18 J. LEGAL STUD. 105, 114-18 (1989) (discussing reasons why parties may want to avoid contracts altogether where breach triggers liability for consequential damages).
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(1989)
J. LEGAL STUD
, vol.105
, pp. 114-118
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Epstein, R.A.1
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228
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37749011492
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See note 161, at, discussing lack of clear rules specifying how parties can contract around defaults
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See Ayres, supra note 161, at 15-17 (discussing lack of clear rules specifying how parties can contract around defaults).
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supra
, pp. 15-17
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Ayres1
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229
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This stickiness is generally explained with reference to behavioral economics. See Russell Korobkin, The Status Quo Bias and Contract Default Rules, 83 CORNELL L. REV. 608, 630-33 1998, relating preference toward status quo to general reluctance to alter contract-law default rules
-
This "stickiness" is generally explained with reference to behavioral economics. See Russell Korobkin, The Status Quo Bias and Contract Default Rules, 83 CORNELL L. REV. 608, 630-33 (1998) (relating preference toward status quo to general reluctance to alter contract-law default rules).
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Some parties preferring the default rule may still incur the costs of explicitly inserting it into their agreements simply to avoid taking the time and expense to determine how the law will handle contractual silence or because they are worried that courts might make mistakes. See Ayres, supra note 161, at 9-10 (discussing these concerns); Louis Kaplow, Rules Versus Standards: An Economic Analysis, 42 DUKE L.J. 557, 618-20 (1992) (asserting that default, or background, rules raise unique jurisprudential problems).
-
Some parties preferring the default rule may still incur the costs of explicitly inserting it into their agreements simply to avoid taking the time and expense to determine how the law will handle contractual silence or because they are worried that courts might make mistakes. See Ayres, supra note 161, at 9-10 (discussing these concerns); Louis Kaplow, Rules Versus Standards: An Economic Analysis, 42 DUKE L.J. 557, 618-20 (1992) (asserting that default, or "background," rules raise unique jurisprudential problems).
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231
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See Ayres & Gertner, supra note 147, at 95-100 (introducing theory of penalty default rules in contract law); Lucian Ayre Bebchuk & Steven Shavell, Information and the Scope of Liability for Breach of Contract: The Rule of Hadley v. Baxendale, 7 J.L. ECON. & ORG. 284, 289-93 (1991) (comparing informational properties of Hadley default with unlimited-liability rule). Most scholars consider the theory behind penalty defaults generally sound, but a recent debate has emerged over their actual use in the law.
-
See Ayres & Gertner, supra note 147, at 95-100 (introducing theory of penalty default rules in contract law); Lucian Ayre Bebchuk & Steven Shavell, Information and the Scope of Liability for Breach of Contract: The Rule of Hadley v. Baxendale, 7 J.L. ECON. & ORG. 284, 289-93 (1991) (comparing informational properties of Hadley default with unlimited-liability rule). Most scholars consider the theory behind penalty defaults generally sound, but a recent debate has emerged over their actual use in the law.
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232
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45949092170
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There Are No Penalty Default Rules in Contract Law, 33
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claiming that penalty defaults do not appear in practice
-
Compare Eric A. Posner, There Are No Penalty Default Rules in Contract Law, 33 FLA. ST. U. L. REV. 563, 565 (2006) (claiming that penalty defaults do not appear in practice),
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(2006)
FLA. ST. U. L. REV
, vol.563
, pp. 565
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Compare1
Eric, A.2
Posner3
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233
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78649821069
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Ya-Huh: There Are and Should Be Penalty Defaults, 33
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disagreeing with Posner, with
-
with Ian Ayres, Ya-Huh: There Are and Should Be Penalty Defaults, 33 FLA. ST. U. L. REV. 589, 590-613 (2006) (disagreeing with Posner).
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(2006)
FLA. ST. U. L. REV
, vol.589
, pp. 590-613
-
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Ayres, I.1
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234
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notes 196-97 and accompanying text
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See infra notes 196-97 and accompanying text.
-
See infra
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235
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45949104741
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See, e.g., Craswell, supra note 161, § 4000, at 5 (If different rules would be efficient for different contracting pairs, the law must also to [sic] decide the extent to which its default rules should be 'tailored', or customized to match the rule that would be most efficient for each individual contracting pair.).
-
See, e.g., Craswell, supra note 161, § 4000, at 5 ("If different rules would be efficient for different contracting pairs, the law must also to [sic] decide the extent to which its default rules should be 'tailored', or customized to match the rule that would be most efficient for each individual contracting pair.").
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236
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45949104608
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This is true because more precise default rules offer some potential benefits, such as reduced transaction costs and reduced error costs. I have explored the tradeoffs elsewhere. See Geis, Optimal Precision, supra note 55, at 1129-38 modeling these tradeoffs through simple empirical experiment
-
This is true because more precise default rules offer some potential benefits, such as reduced transaction costs and reduced error costs. I have explored the tradeoffs elsewhere. See Geis, Optimal Precision, supra note 55, at 1129-38 (modeling these tradeoffs through simple empirical experiment).
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The Uniform Commercial Code, for example, uses different rules for consumers and merchants. U.C.C. § 2-104(1) (2005) defines merchant, and several other sections of the Code offer customized default rules for merchants. See, e.g., id. § 2-205 (allowing merchants to create binding firm offers); id. § 2-314 (implying warranty of merchantability only if seller is merchant). But it is not obvious that this presents an optimal (or even sensible) segmentation.
-
The Uniform Commercial Code, for example, uses different rules for consumers and merchants. U.C.C. § 2-104(1) (2005) defines "merchant," and several other sections of the Code offer customized default rules for merchants. See, e.g., id. § 2-205 (allowing merchants to create binding firm offers); id. § 2-314 (implying warranty of merchantability only if seller is merchant). But it is not obvious that this presents an optimal (or even sensible) segmentation.
-
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238
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45949096394
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note 161, § 4000, at
-
Craswell, supra note 161, § 4000, at 2.
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supra
, pp. 2
-
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Craswell1
-
239
-
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45949091101
-
-
See Sanjai Bhagat & Roberta Romano, Event Studies and the Law: Part I: Technique and Corporate Litigation, 4 AM. L. & ECON. REV. 141, 141-43 (2002) (describing event studies and their use in law).
-
See Sanjai Bhagat & Roberta Romano, Event Studies and the Law: Part I: Technique and Corporate Litigation, 4 AM. L. & ECON. REV. 141, 141-43 (2002) (describing event studies and their use in law).
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240
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45949103037
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Ayres, supra note 169, at 590
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Ayres, supra note 169, at 590.
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241
-
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33645313766
-
-
The topic of contractual boilerplate has received some attention lately. See Omri Ben-Shahar, Foreword to Boilerplate: Foundations of Market Contracts Symposium, 104 MICH. L. REV. 821, 821-25 (2006) (introducing papers from recent symposium on contractual boilerplate).
-
The topic of contractual boilerplate has received some attention lately. See Omri Ben-Shahar, Foreword to "Boilerplate": Foundations of Market Contracts Symposium, 104 MICH. L. REV. 821, 821-25 (2006) (introducing papers from recent symposium on contractual boilerplate).
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-
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In order for this to work, there would need to be relative homogeneity within the subclasses. Otherwise, the results would tell us little about individual members in each class, and we might conclude that we are better served by simple, one-size-fits-all rules
-
In order for this to work, there would need to be relative homogeneity within the subclasses. Otherwise, the results would tell us little about individual members in each class, and we might conclude that we are better served by simple, one-size-fits-all rules.
-
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-
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243
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84963456897
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notes 49-55 and accompanying text
-
See supra notes 49-55 and accompanying text.
-
See supra
-
-
-
244
-
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45949111818
-
-
See FENG-HSIUNG HSU, BEHIND DEEP BLUE: BUILDING THE COMPUTER THAT DEFEATED THE WORLD CHESS CHAMPION 3-5 (2004) (narrating story behind famous tournament).
-
See FENG-HSIUNG HSU, BEHIND DEEP BLUE: BUILDING THE COMPUTER THAT DEFEATED THE WORLD CHESS CHAMPION 3-5 (2004) (narrating story behind famous tournament).
-
-
-
-
245
-
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45949098862
-
-
Artificial Intelligence: Winning Ways, ECONOMIST, Jan. 25, 2007, at 80, 80 [hereinafter Artificial Intelligence].
-
Artificial Intelligence: Winning Ways, ECONOMIST, Jan. 25, 2007, at 80, 80 [hereinafter Artificial Intelligence].
-
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246
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45949084295
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Id
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Id.
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247
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45949091539
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Id
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Id.
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248
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45949093110
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Id
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Id.
-
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-
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249
-
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45949089166
-
The Economist reports that the fastest computers can assess only fifty Go positions in a second, compared with a half-million positions per second in chess
-
The Economist reports that the fastest computers can assess only fifty Go positions in a second, compared with a half-million positions per second in chess. Id.
-
Id
-
-
-
250
-
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45949111196
-
-
See, e.g., Dennis W. Carlton, Using Economics To Improve Antitrust Policy, 2004 COLUM. BUS. L. REV. 283, 304-05 (describing sampling feature of Monte Carlo simulation and how it might be used to guide antitrust law);
-
See, e.g., Dennis W. Carlton, Using Economics To Improve Antitrust Policy, 2004 COLUM. BUS. L. REV. 283, 304-05 (describing sampling feature of Monte Carlo simulation and how it might be used to guide antitrust law);
-
-
-
-
251
-
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0345371036
-
Risk Analysis in Investment Appraisal, 9
-
Savvakis Savvides, Risk Analysis in Investment Appraisal, 9 PROJECT APPRAISAL 3, 4-11 (1994).
-
(1994)
PROJECT APPRAISAL
, vol.3
, pp. 4-11
-
-
Savvides, S.1
-
252
-
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45949108612
-
-
Perhaps surprisingly, it is also much faster for computers to play many repeated random games than to tree out and evaluate all possible moves. See Artificial Intelligence, supra note 181, at 80 (Monte Carlo techniques are much faster than brute force.).
-
Perhaps surprisingly, it is also much faster for computers to play many repeated random games than to tree out and evaluate all possible moves. See Artificial Intelligence, supra note 181, at 80 ("Monte Carlo techniques are much faster than brute force.").
-
-
-
-
253
-
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45949089876
-
-
For some simple examples of this, see Geis, Empirically Assessing Hadley, supra note 55, at 936-42, and Geis, Optimal Precision, supra note 55, at 1129-58.
-
For some simple examples of this, see Geis, Empirically Assessing Hadley, supra note 55, at 936-42, and Geis, Optimal Precision, supra note 55, at 1129-58.
-
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-
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254
-
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45949090359
-
-
The correctness of a decision should be based on both (1) the adequacy of the results that are obtained and (2) the efficiency with which the decision is made. It might be worth sacrificing some of the first element in order to make gains in the second.
-
The correctness of a decision should be based on both (1) the adequacy of the results that are obtained and (2) the efficiency with which the decision is made. It might be worth sacrificing some of the first element in order to make gains in the second.
-
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255
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notes 169-70 and accompanying text
-
See supra notes 169-70 and accompanying text.
-
See supra
-
-
-
256
-
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45949096394
-
-
See note 10, at, describing benefits of partial economic analysis in contract law
-
See Craswell, supra note 10, at 910-15 (describing benefits of partial economic analysis in contract law).
-
supra
, pp. 910-915
-
-
Craswell1
-
257
-
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45949097199
-
-
E.g., Neri v. Retail Marine Corp., 285 N.E.2d 311, 314-15 (N.Y. 1972) (famously applying lost-profit rule in commercial boat sale).
-
E.g., Neri v. Retail Marine Corp., 285 N.E.2d 311, 314-15 (N.Y. 1972) (famously applying lost-volume profit rule in commercial boat sale).
-
-
-
-
258
-
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45949092501
-
-
See FARNSWORTH, supra note 129, at § 12.10 (Even the . . . seller that has purchased the goods for resale from stock and disposed of them to another buyer may claim to have lost as a result of the breach so that damages will not be reduced by what was realized on the second sale.).
-
See FARNSWORTH, supra note 129, at § 12.10 ("Even the . . . seller that has purchased the goods for resale from stock and disposed of them to another buyer may claim to have lost volume as a result of the breach so that damages will not be reduced by what was realized on the second sale.").
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-
-
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259
-
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45949100861
-
Measuring Sellers' Damages: The Lost-Profits Puzzle, 31
-
discussing lost-seller rule and arguing that it is often applied in overcompensatory manner, See
-
See Charles J. Goetz & Robert E. Scott, Measuring Sellers' Damages: The Lost-Profits Puzzle, 31 STAN. L. REV. 323, 329-30 (1979) (discussing lost-volume seller rule and arguing that it is often applied in overcompensatory manner);
-
(1979)
STAN. L. REV
, vol.323
, pp. 329-330
-
-
Goetz, C.J.1
Scott, R.E.2
-
260
-
-
78149479221
-
An Economic Analysis of the Lost-Volume Retail Seller, 57
-
insisting that lost-profits should be measured with reference to ex ante marginal cost curves
-
Victor P. Goldberg, An Economic Analysis of the Lost-Volume Retail Seller, 57 S. CAL. L. REV. 283, 292-93 (1984) (insisting that lost-volume profits should be measured with reference to ex ante marginal cost curves).
-
(1984)
S. CAL. L. REV
, vol.283
, pp. 292-293
-
-
Goldberg, V.P.1
-
261
-
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45949089413
-
-
For example, a penalty default awarding no lost-profit damages might force some retailers to come forward and contract for a nonrefundable deposit or for liquidated damages
-
For example, a penalty default awarding no lost-profit damages might force some retailers to come forward and contract for a nonrefundable deposit or for liquidated damages.
-
-
-
-
262
-
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0348241171
-
-
See generally Barry E. Adler, The Questionable Ascent of Hadley v. Baxendale, 51 STAN. L. REV. 1547, 1550-54 (1999) (refining Hadley model to reflect uncertainty of incurring consequential damages with breach); Ayres & Gertner, supra note 147, at 101-03, 108-18 (describing Hadley problem and setting out economic model of default rule);
-
See generally Barry E. Adler, The Questionable Ascent of Hadley v. Baxendale, 51 STAN. L. REV. 1547, 1550-54 (1999) (refining Hadley model to reflect uncertainty of incurring consequential damages with breach); Ayres & Gertner, supra note 147, at 101-03, 108-18 (describing Hadley problem and setting out economic model of default rule);
-
-
-
-
263
-
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45949105212
-
-
Jason Scott Johnston, Strategic Bargaining and the Economic Theory of Contract Default Rules, 100 YALE L.J. 615, 616-19 (1990) (analyzing Hadley problem under dynamic situations with seller market power).
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Jason Scott Johnston, Strategic Bargaining and the Economic Theory of Contract Default Rules, 100 YALE L.J. 615, 616-19 (1990) (analyzing Hadley problem under dynamic situations with seller market power).
-
-
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-
264
-
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45949095945
-
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See Adler, supra note 196, at 1554-59 (arguing that Hadley rule may be more efficient than expansive liability rule even though it may not minimize aggregate transaction costs of contracting); Posner, supra note 16, at 836-37 (explaining argument that many factors influence whether expansive liability rule is superior, including distribution of valuations, cost of information, and relative bargaining power of parties).
-
See Adler, supra note 196, at 1554-59 (arguing that Hadley rule may be more efficient than expansive liability rule even though it may not minimize aggregate transaction costs of contracting); Posner, supra note 16, at 836-37 (explaining argument that many factors influence whether expansive liability rule is superior, including distribution of valuations, cost of information, and relative bargaining power of parties).
-
-
-
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265
-
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0000575129
-
-
This is true because, in most markets, price is determined by supply and demand and is not equal to buyer willingness to pay. Indeed, the difference between a buyer's valuation and the market price benefits the buyer in the form of consumer surplus. See, e.g, Peter J. Hammer, Antitrust Beyond Competition: Market Failures, Total Welfare, and the Challenge of Intramarket Second-Best Tradeoffs, 98 MICH. L. REV. 849, 891-92 2000, describing difference between price and consumer surplus
-
This is true because, in most markets, price is determined by supply and demand and is not equal to buyer willingness to pay. Indeed, the difference between a buyer's valuation and the market price benefits the buyer in the form of consumer surplus. See, e.g., Peter J. Hammer, Antitrust Beyond Competition: Market Failures, Total Welfare, and the Challenge of Intramarket Second-Best Tradeoffs, 98 MICH. L. REV. 849, 891-92 (2000) (describing difference between price and consumer surplus).
-
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266
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45949091874
-
-
See Posner, supra note 16, at 880 (Models that have been proposed in the literature either focus on small aspects of contractual behavior or make optimal doctrine a function of variables that cannot realistically be observed, measured, or estimated.).
-
See Posner, supra note 16, at 880 ("Models that have been proposed in the literature either focus on small aspects of contractual behavior or make optimal doctrine a function of variables that cannot realistically be observed, measured, or estimated.").
-
-
-
-
267
-
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45949092171
-
-
Geis, Empirically Assessing Hadley, supra note 55, at 951-55. Furthermore, the knowledge-management technology described in this Essay might help scholars gather relevant information on these other parameters.
-
Geis, Empirically Assessing Hadley, supra note 55, at 951-55. Furthermore, the knowledge-management technology described in this Essay might help scholars gather relevant information on these other parameters.
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-
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268
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45949096256
-
-
Admittedly, many economic models of contract law may pose problems along these lines. There may still be opportunities, however, to conduct partial analysis with the data that is available. See Craswell, supra note 10, at 915-17 (arguing value of partial economic analysis in contract law).
-
Admittedly, many economic models of contract law may pose problems along these lines. There may still be opportunities, however, to conduct partial analysis with the data that is available. See Craswell, supra note 10, at 915-17 (arguing value of partial economic analysis in contract law).
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269
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45949101045
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In 1950, Alan Turing suggested an enduring test for artificial intelligence: Can a person holding two natural-language conversations, one with a computer and one with a human, distinguish the two correspondents? A. M. Turing, Computer Machinery and Intelligence, 59 MIND 433, 433-34 1950
-
In 1950, Alan Turing suggested an enduring test for artificial intelligence: Can a person holding two natural-language conversations - one with a computer and one with a human - distinguish the two correspondents? A. M. Turing, Computer Machinery and Intelligence, 59 MIND 433, 433-34 (1950).
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|