Thursday, April 10, 2014
Manuel A. Utset (Florida State University College of Law) has posted two pieces on SSRN. The first is Corporate Actors, Corporate Crimes and Time-Inconsistent Preferences (1 Virginia Journal of Criminal Law, No. 2, p. 265 (2013)). Here is the abstract:
This article examines criminal misconduct by corporations and their agents. It allows for the possibility that corporate agents systematically mispredict their future willpower — their ability to withstand the transient pull of immediate gratification. The article shows that even relatively small mispredictions about their willpower can lead agents to engage in repeated misconduct, notwithstanding a long-term preference to obey the law — “time-inconsistent (TI) misconduct.” As a result, in most criminal law scenarios, the optimal sanctions for corporate actors with perfect self-control will under-deter TI actors. But the article also shows that, to the extent that the immediate costs of committing a crime are sufficiently high, a TI actor may repeatedly procrastinate following through with misconduct that, from a long-term perspective, made economic sense — i.e., the expected benefits exceeded the expected sanctions. In scenarios involving this sort of “time-inconsistent obedience,” the standard optimal sanctions will under-deter. The TI misconduct theory allows for a more intuitive explanation of repeated violations of securities, banking, and environmental laws by corporations and their agents. The theory also predicts that corporate governance problems will be more severe, to the extent that gatekeepers and regulators exhibit TI preferences, and as the immediate costs of acquiring information increases.
The second is Response to Comments by Professors Baer, Candeub, Medwed, Painter, and Prentice (1 Virginia Journal of Criminal Law, No. 2, p. 423 (2013)). Here is the abstract:
My article, “Corporate Actors, Corporate Crimes and Time-Inconsistent Preferences” was part of a symposium in the Virginia Journal of Criminal Law. This is a Response to the Comments to that article: Miriam Baer, “Temporal Inconsistency and the Regulation of Corporate Misconduct”; Adam Candeub, “Akratic Corporations and Dysfunctional Markets”; Daniel Medwed, “Deterrence Theory and the Corporate Criminal Actor: Professor Utset’s Fresh Take on an Old Problem”; Richard Painter, “Sworn to Fun, Loyal to None: Time Inconsistent Preferences in Investment Banking”; and Robert Prentice, “Beyond Temporal Explanations of Corporate Crime.”