Category: Psychology and Behavior

No More Secret Dossiers: We Need Full FTC or CFPB Investigation of “Fourth Bureau” Reputation Intermediaries

There is a superb article by Ylan Q. Mui on the growth of new firms that create consumer reputations. They operate outside the traditional regulation of the three major credit bureaus. Mui calls this shadowy world of reputational intermediaries the “fourth bureau.” The Federal Trade Commission should conduct an immediate investigation of the “black box” practices described by an industry leader in the article. This should be part of a larger political and social movement to stop the collection of “secret dossiers” about individuals by corporate entities. The Murdoch scandal now unraveling in Britain is only the most extreme example of a wholesale assault on privacy led by unscrupulous data collectors.

Once a critical mass of data about a person has been collected for a commercial purpose, she deserves to know what the data is and who is gathering it. Once an educator, employer, landlord, banker, or insurer makes a decision based on that data, the affected individual should be able to challenge and correct it. I have made a preliminary case for such reforms in my chapter Reputation Regulation, in this book. I now think this agenda is more urgent than ever, given the creeping spread of unaccountable data mining in the internet sector to a wild west of reputational intermediaries.

From a Fair Credit Reporting Act to a Fair Reputation Reporting Act

To understand why, it’s helpful to take a step back and look at how poorly regulated even the established credit bureaus are. As Shawn Fremstad and Amy Traub have noted in the Demos report Discrediting America, ample empirical evidence has confirmed that a vast number of traditional credit bureau files are erroneous:
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The Price of Law School Cost Transparency

Higher-education cost transparency is all the rage.  In a recent article in Slate, Annie Lowery argued that:

“It is true that we have tremendous amounts of data about higher education. But it is also true that too often students end up misled, overwhelmed, or confused attempting to gauge the different options. Big, expensive purchases require smart, educated customers. That is why the government created the new fuel-efficiency labels. It is also why the new Consumer Financial Protection Bureau is rolling out simplified, standardized home-mortgage forms. It should not, after all, take a Ph.D. in statistics to get through the college application process.”

This intuition drives politicians like Sen. Boxer to attack the ABA for failing to push law schools to disclose more data, and to crowd-sourced work like Law School Transparency.

In general, I absolutely think that law schools ought to compete on the transparency of their disclosures about student job outcomes, and that the ABA’s highest and best accreditation purpose would be to audit such data for its accuracy.  However, I thought I’d caution proponents of cost transparency of two specific & unanticipated costs of their proposals.

First, think about what cost transparency entails.  To my mind, real law school cost transparency doesn’t mean that we on a clear form provide prospective students a series of blanks: “tuition + anticipated tuition growth” plus “living costs +  anticipated cost increases” minus “expected three-year scholarship”.  We’d also need to disclose our predictions of the student’s chances on the summer job market law school cost is for some students significantly defrayed by summer employment.  If you look nationally, graduating law student debt has spiked in the last two years.  That rise doesn’t follow largely from tuition increases, though that’s part of the story.  Rather, it’s the collapse of the firm job market in 2008 -2010 that did the trick: students lost $10-$30,000 of expected income that would have offset or repaid borrowing.

The problem is that although law schools could get a handle on some of these numbers, disclosing them in a way that’s going to meet students’ ever-rising expectations isn’t exactly an easy task.  Think about the average administrator in charge of this disclosure — how likely is it that they will be able to do so in a way that meets Lowery’s standard of clarity, accuracy, and replication? Even when they are excellent at their job today, this kind of data-organization and display task would demand a fundamentally new set of skills.   Bringing in a new body is a fine idea, although many law schools are operating under hiring freezes to control tuition growth. Moreover, as Gordon Smith observed some years ago with reference to curricular change, legal education reformers often discount opportunity costs severely.  So if law schools spend more time on figuring out the expected costs of law school education, they are going to spend less time on something else.  (And, likely, less money.)  What’s that to be?  My guess is: library resources, clinics, and research support.  Maybe that’s a worthwhile trade-off, but it strikes me that discussions of cost transparency are really just proxies for complaints about cost, period.  Real law school cost will fall if and when the legal job market recovers.

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UCLA Law Review Vol. 58, Issue 3 (February 2011)

Volume 58, Issue 3 (February 2011)


Articles

Good Faith and Law Evasion Samuel W. Buell 611
Making Sovereigns Indispensable: Pimentel and the Evolution of Rule 19 Katherine Florey 667
The Need for a Research Culture in the Forensic Sciences Jennifer L. Mnookin et al. 725
Commentary on The Need for a Research Culture in the Forensic Sciences Joseph P. Bono 781
Commentary on The Need for a Research Culture in the Forensic Sciences Judge Nancy Gertner 789
Commentary on The Need for a Research Culture in the Forensic Sciences Pierre Margot 795


Comments

What’s Your Position? Amending the Bankruptcy Disclosure Rules to Keep Pace With Financial Innovation Samuel M. Kidder 803
Defendant Class Actions and Patent Infringement Litigation Matthew K. K. Sumida 843


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Cognitive Illiberalism and the Speech-Conduct Distinction

The partisanship and bad faith of judges who disagree with us has never been more obvious, or more pernicious. For many, the most irritating personality flaw of judicial politicos (and their fellowtravelers) isn’t the bottom-line results of the opinions themselves, it is that judges refuse to acknowledge their own biases, though it’s evident that they aren’t neutral umpires, but rather players in the game.  Indeed, almost every decision you read about these days comes accompanied by a reference  to the political party of the appointing President – as if you needed the help!  As Orin Kerr has brilliantly pointed out, “people who disagree with me are just arguing in bad faith.”

For the Cultural Cognition Project, the way that we talk about legal decisions – and decisionmakers – is a subject of study and concern.  We decided to take a careful look at this topic — which we’ve previously touched on in work like Whose Eyes Are You Going To Believe. Our motivation was to investigate how constitutional norms requiring neutrality in fact finding interact with individuals’ tendencies to perceive facts and risks in ways congenial to their group identities.  Building on Hastorf/Cantril’s social psychology classic, They Saw a Game: A Case Study, we’ve written a new piece about how motivated cognition can de-stabilize constitutional doctrine, render legal fact-finders blind to their own biases, and inflame the culture wars. Our resulting paper, “They Saw a Protest”: Cognitive Illiberalism and the Speech-Conduct Distinction, results from my collaboration with Dan Kahan, Don Braman, Danieli Evans, and Jeff Rachlinski.  The paper is just up on SSRN, and I figured to jump-start the conversation by using this post to talk about our experimental approach and findings.  (I think that Kahan is blogging on Balkinization later in the week about the normative upshot of Protest.)

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The Representation Debate Continues

Jim Greiner and Cassandra Wolos Pattanayak have emailed me a reply to the Harvard Legal Aid Bureau’s comment on What Difference Representation. Since the topic has been the subject of several posts here, as well as some off-line communication from interested readers, I figured that I owed Greiner/Pattanayak a public space for reply.  It consists of a bit of introductory text, and a longer (9-page) paper.

“We recently became aware that HLAB President Rachel Lauter and HLAB Faculty Director David Grossman had written an email to the clinical listserve addressing our paper “What Difference Representation?”.  The email has been posted to various locations in the blogosphere.  Because the email expresses criticisms of the paper that we also have received from one or two other sources, we thought we would take the opportunity the email presented to clarify certain issues.  For example, President Lautner and Professor Grossman echo reactions we have received from another legal aid provider when they say that our study produced “only limited information,” and that more (and more useful) information would be available if we would just analyze the data properly.  We explain here that the analysis the email (and one or two other legal services providers) have advocated is statistically invalid, and that in any event the data required for it do not presently exist and cannot at this time be ethically collected.  As ought to be clear by now, we have the greatest respect for the students of HLAB, including President Lautner, and HLAB’s clinical faculty, including Professor Grossman.  We are using President Lautner and Professor Grossman’s email as a convenient foil representative of a few other comments we have received.

The substance of our response can be captured in the answers to two questions.

1.  Why study the effect of offers of HLAB representation?  All agree that the effect of actual use of representation is interesting, although as we will explain, perhaps less so than one might think at first.  But why study the effect of HLAB offers?

2.  Why not compare those who got offers from any source, not just HLAB, to those who did not get any such offers?}  This is what President Lauter, Professor Grossman, and a few others have suggested.  Why not make this comparison?

We also answer one final question:

3.  So how can we find out about the effect of offers from other service providers?”

To read the full response, click here.

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Root Root Root for the Home Team.

Fangraphs has a figure that (for those who care about sabermetrics) tells quite a tale.  As the picture to the right, and associated analyses, makes clear, fans of a team generally project that the individual players will perform better than they actually do.  Overall, the community of fans was “in the middle of the pack compared to other projection systems,”  and so the result isn’t simply a function of noise or foolishness.  This finding is a nice observational data correlate of a very old & famous social psychology experiment – They Saw a Game: A Case Study, by Hastorf and Cantril.  In that experiment, observers’ experience of the refereeing of a game was biased by their fandom — we see fouls when the other team commits them.

It would be interesting to see if baseball professionals – scouts, GMS, etc. – exhibit the same effect.  That kind of motivated reasoning isn’t exactly the premise of Moneyball – which argued that teams were blinded by tools, not self-serving bias.  But it provides an alternative explanation for why teams overpay to retain their own players — they believe they will do better than the market does. This analysis, of course, can be extended to firms at large.  Though many analyses of executive compensation focus on managerial capture, there’s another story: the owners and directors of the firm are fans, and consequently mispredict its future.

Of course, none of this analysis at all explains why the Washington Nationals overpaid for Jayson Werth.  Or why Cliff Lee rejected two higher offers to live in Center City Philadelphia.  Some results are just magical.

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Virtual Perils of Cyber Hate and the Need for a Conception of Digital Citizenship

Although intermediaries’ services can facilitate and reinforce a citizenry’s activities, they pose dangers that work to undermine them.  Consider the anonymous and pseudonymous nature of online discourse.  Intermediaries permit individuals to create online identities unconnected to their legal identities.  Freed from a sense of accountability for their online activities, citizens might engage in productive discourse in ways that they might not if directly correlated with their offline identities.  Yet the sense of anonymity breeds destructive behavior as well.  Social science research suggests that people behave aggressively when they believe that they cannot be observed and caught.  Destructive online behavior spills offline, working a fundamental impairment of citizenship.

For instance, digital expressions of hatred helped inspire the 1999 shooting of African-Americans, Asian-Americans, and Jews in suburban Chicago by Benjamin Smith, a member of the white supremacist group World Church of the Creator (WCOTC) that promotes racial holy war.  Just months before the shootings, Smith told documentary filmmaker Beverly Peterson that: “It wasn’t really ‘til I got on the Internet, read some literature of these groups that . . . it really all came together.”  More recently, the Facebook group Kick a Ginger Day urged members to get their “steel toes ready” for a day of attacking individuals with red hair. The site achieved its stated goal: students punched and kicked children with red hair and dozens of Facebook members claimed credit for attacks.

Cyber hate can produce so much psychological damage as to undermine individuals’ ability to engage in public discourse.  For instance, posters on a white supremacist website targeted Bonnie Jouhari, a civil rights advocate and mother of a biracial girl.  They revealed Ms. Jouhari’s home address and her child’s picture.  The site showed a picture of Ms. Jouhari’s workplace exploding in flames next to the threat that “race traitors” are “hung from the neck from the nearest tree or lamp post.”  Posters included bomb-making instructions and a picture of a hooded Klansman holding a noose.  Aside from moving four times, Ms. Jouhari and her daughter have withdrawn completely from public life; neither has a driver’s license, a voter registration card or a bank account because they don’t want to create a public record of their whereabouts.

Search engines also ensure the persistence and production of cyber hate that undermines citizens’ capability to engage in offline and online civic engagement.  Because search engines reproduce information cached online, people cannot depend upon time’s passage to alleviate the damage that online postings cause.  Unlike leaflets or signs affixed to trees that would decay or disappear not long after their publication, now search engines index all of the content hosted by social media intermediaries, producing it instantaneously. Read More

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Greetings from Panera’s Free Community Café

Thanks to everyone here at Concurring Opinions for hosting me as a guest blogger this October. I’m writing this blog post on my laptop at the Café, here in downtown Clayton, Missouri, a suburb of St. Louis. You may have heard about the rather unusual business model of this Café; it runs on a type of “honor system” where it is left up to the customer to decide what to pay (the menu lists suggested amounts). You decide, however, how much to put into the donation box or tell the cashier how much to put on your credit card.

I paid the (suggested) amount for my lunch, and everything was exactly the same as it would at any other Panera chain, so in my mind, it’s an identical experience. But what are other customers doing? According to a recent story in the St. Louis Post Dispatch, 65% of customers leave the retail price, 10 to 15 percent leave more, and the remaining 10 to 20% leave less. The same story reports that the store is breaking even, with the company’s hope that start making a modest amount of money soon.

According to another news story, some people love the café, leaving a little extra to bring themselves “good karma,” and there are needy people who have made this a regular stop, bringing in money when they can afford it or volunteering an hour or two to help out at the café. But others are skeptical. Some don’t want to put in more money than the suggested amount because there is no means testing and it’s unclear where the money is going. The proprietor of a local (cheap) diner is complaining that with the charitable mission of the restaurant, it’s cutting into her segment of the market. Some people have expressed puzzlement that the café would be located in a well-off business district, instead of a place where there might be more need for free food.

My guess is that in order to sustain itself, the Café needs to replicate the experience at other Paneras as closely as possible; it doesn’t want to change the “feel” of the restaurant. As former CEO Ron Shaich said, “it’s a fascinating psychological question . . . There’s no pressure on anyone to leave anything. But if no one left anything, we wouldn’t be open long.” I guess the question is whether they need to make a profit in order to stay open – as a new friend commented to me the other day, the café is generating a lot of goodwill for Panera.

I’m curious to see how the business model fares and I’ll definitely return to the café. I’ve had many thoughts about corporate social responsibility (CSR) in business recently, due to a paper I’ve been working on, and you’ll see several other posts from me on this theme.

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Money Matters in Ongoing Marriage Law

Married life is characterized by a sharing norm. As I described in an earlier post, spouses commit to and in fact engage deeply in sharing behavior, including a shared family economy. Overwhelmingly, spouses pool economic resources, including labor, and decide together how to allocate them to benefit the family as a whole.

In addition to its affects in the paid labor market (see my last post), sharing money matters inside a functioning marriage.  It shapes the couple relationship as well as each partner individually. Research shows that in an ongoing marriage, money is a relational tool. For example, making money a communal asset is a way to demonstrate intimacy and commitment, and that can nurture a couple’s bond. Yet, in some circumstances, an assignment of resources to just one spouse can also be understood (by both partners) to be appropriate and deserved—a recognition of the individual within a sharing framework. Conversely, it is also possible that spouses’ monetary dealings can undermine individual autonomy and the relationship as well. For example, one person might exercise authority over money in a way that disregards the other. Accordingly, power to influence financial resource allocation within the family is important for individual spouses and for togetherness.

It becomes a special concern then, that sharing patterns in marriage are gendered.  As highlighted in my previous post, role specialization remains a part of modern intimate partner relations. Particularly true for married couples, men continue to perform more as breadwinners, and women more as caregivers. As a result, women tend to have reduced earning power in the market. How does this market asymmetry translate into economic power at home? Happily, in a significant departure from the past, a majority of couples report that they share financial decisionmaking power roughly equally. Indeed, most married couples today endorse gender equality as an important value in their relationship. However, in a significant minority of marriages, spouses agree that husbands have more economic power. For some couples then, a husband’s breadwinning role and/or perhaps his gender, confers authority in contentious money matters.

How should law governing an ongoing marriage respond to these sharing dynamics? Consider this hypothetical fact situation. A husband has a stock account from which he plans to make a gift to his sister who he feels really needs the money. The husband suspects that his wife would not approve of the gift. Even though the wife too loves the sister, she believes the sister is irresponsible with money. Let’s assume that the money in that stock account was acquired while the parties were married, and that it came from the market wages of one or both of the spouses earned during marriage. It was a product of the couple’s shared life. Does contemporary law allow the husband to give his sister the gift without her consent? Without even telling her? How should legal power over the money be allocated?

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Tear-Jerker in Case of Lottery-Winning Octogenarian Sisters

Widely reported as a feud over a half-million dollar winning lottery ticket between two octogenarian sisters, close friends their first 70 years, it turns out to have been a fight over a $250 debt.   In 1995,  Terry Sokaitis and Rose Bakaysa, each now close to 90 years old, signed a written agreement saying they were partners in a longstanding and fun gambling program, winnings to be split equally.  In 2005, a lottery ticket Rose bought with their brother won $500,000.  Terry wanted her share but Rose refused.  Rose said they rescinded the 1995 deal during a heated 2004 telephone argument. 

Within weeks, Terry sued Rose for breach of contract. In court, Rose also argued that any deal they had was unenforceable because it amounted to an illegal bargain under state anti-gambling statutes.  As I reported, the Connecticut Supreme Court resolved that narrow issue against Rose, showing how the ancient statute was functionally superseded by a host of legalized state gambling that put contracts to split lottery ticket winnings outside its scope.   Back in the trial court, five years after Terry sued, Rose asserted the rescission defense and after a trial in the spring, a judge found that rescission valid.

The unreported opinion adds details to this sad tale, sisters tight for 70 years, through marriage, illness, and all, turning bitter when they couldn’t agree on whether Rose had loaned Terry $250 or $100, and over whether Terry had any money to repay her.  During the heated talk that resulted, Terry yelled that she didn’t want to be Rose’s gambling partner anymore and Rose said okay.  The sisters haven’t spoken since.  That Rose won the half million with their brother a year  later seems to have sealed the bitterness.  In her opinion after trial, Connecticut Judge Cynthia Sweinton reprints a letter Terry wrote Rose as their legal battle intensified.  It’s a tear-jerker, be warned, but it follows. (I have corrected some spelling and grammar mistakes.)

Judge Sweinton, before concluding her opinion, wrote resonantly: “There is something in this tragedy that touches most people. While the court may be able to resolve the legal dispute, it is powerless to repair the discord and strife that now overshadows the once harmonious sisterly relationship.”

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