Month: August 2019

Can Nudging Consumers Help Promote Corporate Social Responsibility?

Governments around the world are trying to determine how to effectively promote corporate social responsibility (CSR). It has proven to be hard to regulate for CSR, so the focus has been on other policy initiatives. On the supply side, in response to calls from governments, corporations have adopted codes of conduct and related programs to promote CSR. In the eyes of CSR activists, these efforts have produced limited progress.

Attention is also being paid to the demand side of the equation. If consumers prefer socially produced goods, corporations will have incentives to adopt strong CSR programs. Behavioural sciences have suggested less interventionist ways to steer consumer choice towards socially responsible choices, in particular through various forms of nudging and social norms. Continue reading “Can Nudging Consumers Help Promote Corporate Social Responsibility?”

The New Bargaining Theory of Corporate Bankruptcy and Chapter 11’s Renegotiation Framework

A post by guest blogger Professor Anthony J. Casey (University of Chicago)

The prevailing theory of corporate bankruptcy law states that its purpose is to vindicate or mimic the agreement that creditors would have reached if they had bargained with each other to write their own rules. That idea – the Creditors’ Bargain theory – has held a central place in the minds of lawyers, judges, and scholars for almost forty years. At the same time, Creditors’ Bargain theorists have struggled to explain what actually prevents creditors from bargaining with each other and how efficient rules that interfere with creditors’ bargained-for rights fit into the theory.

Meanwhile, in other areas of the law, scholars have long recognized the limits of hypothetical contract theories. Notably, scholars have shown that when parties have limited or asymmetric information and incentives to bargain strategically, their contracts will be incomplete in ways that the law cannot remedy with a hypothetical contract. Bankruptcy scholars have never squarely addressed this challenge.

Taking aim at these issues, my article, The New Bargaining Theory of Corporate Bankruptcy and Chapter 11’s Renegotiation Framework, proposes a new law-and-economics theory of corporate bankruptcy. Continue reading “The New Bargaining Theory of Corporate Bankruptcy and Chapter 11’s Renegotiation Framework”