Volume 19, Issue 1

The European Association of Law and Economics (EALE) grants a biennial Lifetime Achievement Award and Honorary Membership to a scholar “for his or her significant contributions to the field of Law and Economics, in particular to the development of this scientific movement in Europe.” Ariel Porat was the recipient of the EALE award in 2020. As per tradition, the recipient of the award is asked to deliver the EALE Award Lecture the year after the announcement of the prize—an event that, due to the pandemic, was postponed until the 2022 EALE Annual Meeting, which was held in Lisbon (Portugal), on September 15, 2022. The award lecture will be published in the Review of Law & Economics , following these remarks on Ariel Porat’s significant contributions to the field of law and economics.

When insurance works properly it provides insureds with optimal incentives to prevent losses, alongside coverage for losses that could not be prevented efficiently. But insurance has an overlooked dark side to it as well. Insurers employ various tactics to shift losses to their insureds or to their victims in order to minimize their own costs instead of reducing their insureds’ losses. Worse, insurers might also act to increase or maintain long term risks, ensuring the future of the insurance business that can’t exist without risks. We focus on the incentives of insurers to engage in anti-competitive practices and trigger harmful behaviors of their insureds or third parties, in order to increase demand for insurance coverage. Policymakers should be aware and critical of insurers’ perverse incentives that counteract the interests of the insureds and society.

From the late 1970s into the 1990s, 20 states in the USA passed’ mandatory arrest laws’, designed to curb domestic violence, by requiring the responding officer to arrest the offender. I show that these laws led to an increase in the mortality rates of African-American women. The increase takes place approximately four years after the law was passed and loses its statistical significance as time passes. I infer from these results that mandatory arrest laws had unintended consequences for the victims whose partners were arrested, but that these unintended consequences impacted the victims only in the few years following the law. I conclude that increased awareness of the law and offender deterrence eventually mitigates these unintended consequences. I propose a potential explanation for the increase in mortality rates, and make a policy recommendation that offenders and victims be informed about the law change if such a change is to be made.

An increasingly important form of electronic currency is the ‘stablecoin’. Unlike other high-profile ‘cryptocurrencies’, such as Bitcoin, stablecoins claim to be matched by a corresponding amount of secure assets in a national currency to which the stablecoin can be converted at par. These crypto-assets, however, create significant legal and economic problems. Notably, issues about trust in both issuers and backing assets, the risk of runs, and particular challenges associated with public and private law regimes resist the adoption of stablecoin both in Europe and beyond. This article draws from previous experiences to analyse these issues and propose solutions. Taking a multi-disciplinary approach, the article argues that the legal and economic issues surrounding today’s stablecoins could be addressed using the lessons from prior centuries.

Psychological studies of punitive intuitions demonstrate that the economic theory of optimal deterrence is fundamentally counterintuitive. We punish in response to the moral blameworthiness of the crime with little regard for the consequences. But it is less clear whether optimal deterrence is acceptable. When the law is not accepted by the community it governs, its crime control efficiency suffers. If optimal deterrence is wholly unacceptable, then it is counterproductive as a guide to penal policy. I administered an online survey to university students to examine the acceptability of different applications of optimal deterrence theory. The participants rejected nearly all of the applications, with the sole exception of an increase in punishment severity on the general policy level. They were also more willing to accept smaller, rather than bigger, changes of punishment severity; and increases, rather than decreases of punishment. The results suggest penal policy may be slightly adjusted in the direction suggested by economic analysis of criminal law without a major loss to the law’s moral credibility – especially if the adjustment involves an increase in punishment magnitude.