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Faculty Working Papers

Bound print copies of George Mason School of Law’s working paper series on law and economics are available in the Law Library. The bound set often includes initial drafts of papers. Search Mason’s Catalog to locate a working paper.

Research Paper Series

Working Papers

Recent Working Papers:

The Supreme Court, Education, and the KKK in the 1920s

David E. Bernstein
Meyer v. Nebraska and Pierce v. Society of Sisters present historians with a puzzle. The Court had refused previous opportunities to initiate a due process jurisprudence that expanded beyond freedom of contract and property rights. Why did the Court suddenly adopt a more aggressive understanding of the Due Process Clause in Meyer and Pierce?
As has been discussed elsewhere, there are several plausible and non-exclusive explanations. This article focuses on the Justices’ hostility to the Ku Klux Klan. The Klan had been a leading force behind laws regulating or banning private education, and the Court’s decisions in Meyer and Pierce likely in part reflected a pushback against the Klan’s agenda.
Part I of this Article discusses the Klan’s resurgence in the early 1920s and its role in sponsoring legislation targeting private schools. This included the Oregon compulsory public education law invalidated by the Court in Pierce.
Part II discusses the Court’s hostility to the Klan. This section discusses a significant anti-Klan ruling that has received little scholarly attention, the 1928 case of Bryant v. Zimmerman. In Zimmerman, the Court upheld a New York law requiring certain membership organizations, including the Ku Klux Klan, to register their membership lists with the state. The Court held that this requirement did not violate constitutional rights, particularly freedom of association or due process. Importantly, the Court’s holding was not based on a rejection of the notion that the Fourteenth Amendment protects the freedoms of private membership organizations. Rather, the Court focused on the malevolent nature of the Klan.

Public Use, Exclusionary Zoning, and Democracy

Ilya Somin
The twentieth anniversary of Kelo v. City of New London is a good opportunity to consider the broader significance of public use for constitutional theory, and to explore parallels between the “public use” issue at stake in that case, and another major issue in constitutional property rights under the Takings Clause: exclusionary zoning. In the twenty years since Kelo, exclusionary zoning and the housing crisis it has caused have emerged as major issues in public policy and legal debate. Kelo famously ruled that the Fifth Amendment requirement that takings must be for a “public use” does not bar the employment of eminent domain to take homes for privately owned “economic development.” The Court endorsed a broad definition of “public use” that included almost any disposition of condemned property that might benefit the public in some way. Exclusionary zoning – defined here as regulatory restrictions on the types of housing that can be built in a given area - is a major factor in the national housing crisis, that has increased housing costs, prevented millions of people from “moving to opportunity,” and impaired economic growth and innovation. opportunities. There are striking and largely unnoticed parallels between the “public use” question decided in Kelo and the constitutional issues raised by exclusionary zoning.
Part I highlights the strikingly similar history of the two issues. In both cases, there is a strong originalist argument that the policy in question – private-to-private condemnations in one case, exclusionary zoning in the other – violate the property rights provisions of the Fifth Amendment. The former violates the requirement that the use of eminent domain be for a “public use;” the latter that severe restrictions on owners’ rights to use their land require “just compensation” under the Takings Clause. But, in both cases, the Supreme Court and federal courts generally have taken a highly deferential approach since the rise of Progressive and New Deal-era skepticism of property rights. That skepticism was in large part driven by concerns that judicial protection for property rights is undemocratic, inhibits government planning, and tends to benefit the rich at the expense of the poor and disadvantaged.
Part II outlines ways in which the traditional conventional wisdom on these two issues is wrong. Judicial deference on both public use and exclusionary zoning has greatly harmed the poor and disadvantaged, particularly racial minorities. Moreover, stronger judicial review can actually further “representation-reinforcement” in two ways: by giving voice to groups excluded from the political process, and by empowering them to “vote with their feet.” 
Part III briefly highlights some synergies between judicial enforcement of public use limitations on eminent domain, and enforcement of restrictions on exclusionary zoning. Both help empower people to live where they wish. Striking down exclusionary zoning would make it harder for local governments to keep people out; Reversing Kelo would make it harder for them to expel those already living in the area. Opponents of exclusionary zoning could also potentially learn useful lessons from the Kelo experience on how litigation can be effectively combined with political action.

The Federalist’s Dilemma: State AI Regulation & Pathways Forward

Evangelos Razis, James C. Cooper

AI has captured everybody’s imagination, especially policymakers. The extent to which imagination has translated into action, however, is a mixed bag. At the federal level, Congress has studied the issue, weighed grand proposals, and held countless hearings on AI but has enacted only modest legislation. While executive branch agencies and the FTC have talked a big game, their accomplishments have also been modest, mostly due to limits on legal authority. Not surprisingly, as with data privacy, states have stepped into the vacuum created by federal inaction with AI regulations of their own. Typically, states acting as laboratories is a good thing, allowing experimentation and competition to hone the efficiency and fit of regulatory regimes to different situations. But when the subject of regulation is interstate – and in this case global—by nature, a patchwork of state regimes is far from ideal. The solution to this dilemma is often seen as a binary: allow the state patchwork to evolve for better or worse, or stop it in its tracks with a federal preemptive response. We see this as a false choice and offer two potentially better paths. First, would be for Congress to enact a national “moratorium” on state laws regulating AI. We argue that this as a superior approach because it will arrest potentially harmful regulation and the patchwork problem and alleviate pressure on Congress to pass premature AI laws merely to prevent the states from acting. Second, would be to honor choice of law provisions in AI-related contracts, thereby fostering competition among firms and states to provide efficient AI regulation. Borrowing from the ideas of Larry Ribstein and various coauthors, we argue that firms would compete for consumers by choosing to be regulated by the regime that maximized their profits, and states would compete to enact efficient laws. In sum, we think the current rush to regulate AI, whether at the state or federal level, is premature. Regulators have existing tools to address consumer harms. The problem is that our federal system, just like nature, abhors a vacuum, and states are filling it with a patchwork of potentially onerous and inconsistent AI requirements. The pressure to prevent state action, in turn, may force Congress’ hands into an ill-considered and hasty response that is little better than the states’ alternative. We see our hybrid approaches as a way out of this dilemma.

Supporting Free Speech and Countering Antisemitism on American College Campuses

David E. Bernstein, David L. Bernstein

This article addresses what university leaders should do about the surge of antisemitism on American college campuses following Hamas’s October 7, 2023 atrocities from the perspective of committed free speech liberals—who both happen to be named David Bernstein—who also wish to protect the civil rights of Jewish students. 

The authors first note that many antisemitic incidents on campus have involved vandalism, assault, and disruptive and illegal protests (e.g., building occupations and illicit encampments) and other acts that violate content-neutral regulations. While the perpetrators of these acts have often defended themselves as engaging in freedom of expression, these acts can and should be punished without infringing free speech. 

Similarly, while faculty should be free to advocate anti-Israel positions, even extremist ones, universities must draw the line when such advocacy turns into discrimination against individuals with ties to Israel or with “Zionist” political positions, or when a professor participates in the BDS movement’s boycott guidelines in ways that conflict with university policy or the law. 

The article also tackles "harder" cases, where offensive speech, such as pro-Hamas chants and extremist anti-Zionist rhetoric, that test the limits of free expression. The authors argue that universities should protect such speech, in part because of liberal principle, and in part because of the pragmatic judgment that in long-run Jews thrive where liberalism, including free speech liberalism, thrives.

On the other hand, universities may not enforce double standards in speech regulation, exemplified by Harvard and University of Pennsylvania’s tolerance of antisemitic rhetoric while punishing other offensive speech. The authors agree that the proper solution to such double standards is to protect speech across-the-board, though they disagree on the proper strategy with regard to universities that insist on enforcing double standards.

The article concludes that universities must consistently apply content-neutral rules, maintain institutional neutrality, and protect both free speech and nondiscrimination to create an environment where Jewish students and others can thrive. By disentangling speech from unlawful conduct and addressing administrative hypocrisy, the authors offer a nuanced liberal framework for resolving these campus challenges.

The Injunction Function: How and Why Courts Secure Property Rights in Patents

Adam Mossoff

Property rights facilitate market transactions and economic growth by securing exclusive rights to their owners. This economic principle is true for all property rights, whether in land or in inventions. Today, many judges, lawyers, and commentators misunderstand this fundamental truth in patent law. Patent owners are no longer able to obtain injunctions against continuing or willful violations of their property rights, especially if they are using the licensing business model that was first employed in the U.S. innovation economy in the 1790s. This alteration in patent remedies was wrought by the Supreme Court in its 2006 decision in eBay v. MercExchange.

Given the mistaken conventional wisdom today about injunctions, this article describes the economic and normative function of injunctions as the legal backstop for negotiations in the free market. Despite litigators and judges thinking this remedy is the end of the story, because it issues at the end of a hearing against a defendant found to be infringing a valid patent, an injunction is just the beginning of the commercial story. In cases of unauthorized commercial use of an asset in which the owner sues to stop this trespass, an injunction is what compels a company or person to negotiate with the property owner for the use of this asset. Injunctions facilitate arms-length negotiations and the setting of market prices through these contracts and licenses. This article reestablishes these key normative and economic insights in patent law. It describes how eBay altered the historical doctrine for securing patents with injunctions against continuing infringement, and how this has undermined the economic function of patents, which have been secured as property rights in the U.S. innovation economy from the early American Republic.

An Update on the Capital One/Discover Merger: Is There a Subprime Market for Credit Cards?

Todd J. Zywicki
The proposed $35 billion combination of Discover Financial Services Inc. and Capital One Financial Corp. has faced scrutiny regarding its impact on “subprime” credit-card customers. Though the deal has been approved by federal regulators, there remains the potential that states could object to the combination on grounds that it harms subprime consumers. This issue brief examines whether such consumers constitute a distinct market for antitrust purposes and concludes they do not.
A fundamental challenge is the absence of a standardized definition of “subprime.” Credit bureaus, lenders, and government agencies use different credit-score thresholds to classify consumers—e.g. VantageScore considers scores between 300-600 to be subprime, while FICO uses different terminology entirely. This inconsistency makes it impossible to clearly delineate a market segment. Additionally, credit scores are highly dynamic, with research showing that about 40% of subprime borrowers improved to higher credit tiers during the pandemic.
Consumers with lower credit scores have numerous alternatives to traditional credit cards, including secured cards, buy-now-pay-later services (used by 21% of consumers with credit records in 2022), and personal loans. These substitutes prevent the merged entity from exercising market power. Major banks like JPMorgan Chase, Citigroup, and Bank of America already serve subprime borrowers, and could expand these offerings if needed.
Rather than harming competition, a merged Capital One-Discover could benefit consumers with lower credit scores by expanding the reach of Capital One’s sophisticated analytics, which identify lower-risk individuals among those with subprime scores. While the combined company would control approximately 30% of subprime credit-card balances, this falls far short of monopoly power, given the competitive constraints from other issuers and alternative credit products.

Forensic Accounting and Valuation in Delaware Litigation

J.W. Verret

This Article describes the forensic accounting and valuation tools available to Delaware litigators in commercial and corporate litigation as well as family law. Further, it details the licensing process and standards applicable to forensic accountants and shows how the methods utilized in this profession can assist litigators in a variety of contexts. Delaware cases in which courts have accepted or limited the use of expert forensic accountant testimony are explored and general principles for utilizing forensic accounting expertise in Delaware litigation are developed. The uses of forensic accounting in Delaware litigation are demonstrated across appraisal actions, divorce cases, fraud and fiduciary actions and investigations, and economic damages estimation.

Assembly, Public Use, and Reciprocity of Advantage Regulation

Eric R. Claeys
This Article contributes to a symposium hosted at Yale Law School on the twentieth anniversary of Kelo v. City of New London (2005). The Article studies how rights-based property theories approach assembly, the process in which a government condemns property held by some private parties, consolidates that property, and assigns it to another private party to produce new social value. According to Kelo, the Fifth Amendment’s Public Use Clause limits government-backed assembly only barely. Rights-based theories can justify assembly, but they lay down stricter limits on it than Kelo does. In a rights-based legal system, the power to assemble property exercises not the eminent domain power but the police power, and specifically the power to regulate property to secure an average reciprocity of advantage. Two elements determine whether a law genuinely regulates in this manner—necessity, and a genuine reciprocity of advantage—and those elements can be applied to assembly projects.
This Article’s account of assembly avoids green-lighting most proposed assemblies (as Kelo does) without barring them all. Normatively, the account asks fair questions about assembly proposals. How compelling is the public’s case for forcing private citizens to sacrifice their property rights? And if an assembly project is supposed to produce social value, why shouldn’t the proprietors share in the advantage from the promised social gains? Doctrinally, this Article offers a roadmap for overhauling contemporary public use doctrine. The U.S. Supreme Court treated assembly problems as reciprocity of advantage problems in the first assembly cases it considered after the Fourteenth Amendment was ratified—Head v. Amoskeag Manufacturing Co. and Wurts v. Hoagland (both 1885), and Ohio Oil Co. v. Indiana (1900). If Head, Wurts, and Ohio Oil Co. treat assembly problems fairly, then the Court’s later assembly cases—from Clark v. Nash (1906), through Berman v. Parker (1954), to Kelo—should be limited or overruled.

Eleventh Circuit Conservatives Split on Gun Sales to Young Adults: Pryor v. Brasher in NRA v. Bondi

Nelson Lund

Legal debates between leftists and conservatives are rarely as interesting as “intramural” debates between conservatives. The Eleventh Circuit’s recent en banc decision in National Rifle Association v. Bondi illustrates the point. By a vote of 8-4, the court held that a Florida statute prohibiting the purchase of firearms by individuals between the ages of 18 and 21 does not violate the Second Amendment. The majority opinion was written by Chief Judge William H. Pryor, Jr., while Judge Andrew L. Brasher wrote the principal dissent. Both are able and principled jurisprudential conservatives, and Judge Brasher is a former law clerk for Chief Judge Pryor.

The dispute between these judges, which was solely about the proper application of the Supreme Court’s decisions in Bruen (2022) and Rahimi (2024), illustrates the problematic nature of that Court’s novel history-and-tradition test.

American Revolutions in the Law of Trusts

Thomas P. Gallanis

American trust law is revolutionary. It departs in fundamental ways from the trust law of other major common-law jurisdictions, such as England, Australia, Canada, the Hong Kong Special Administrative Region, and Singapore. It also differs greatly from the trust law of the major civil-law countries that have adopted the trust, such as mainland China and Japan. This Article identifies five revolutions in American trust law. Each revolution is examined in its historical context and with regard to its lasting effects. Together, the five revolutions explain American trust law's distinctiveness. The Article's primary aim is to shape how American trust law is understood, historically and today. The Article's contribution is as fundamental as periodization. We used to teach that the "Roman Empire" was followed by the "Early Middle Ages." This periodization was transformed by the pioneering scholarship of the historian Peter Brown. Professor Brown is credited with creating the field of Late Antiquity, approximately AD 250-750. Analogously, this Article's framework of the five revolutions is designed to shape our understanding of the history and development of America's distinctive trust law. Part I of the Article identifies and analyzes the five revolutions. Part II offers a personal assessment of American trust law's distinctiveness. A brief conclusion follows.

Political Debanking

Todd J. Zywicki
This article examines the escalating practice of “political debanking”—the involuntary termination of banking services to individuals and organizations based on their political or religious views—and its profound implications for free speech and democratic participation. Drawing on Milton Friedman’s insights about the interdependence of economic systems and free expression, the article argues that access to financial services is a prerequisite for exercising constitutional rights. It traces the rise of political debanking from the Obama Administration’s Operation Choke Point, which targeted disfavored industries under the guise of “reputation risk,” to its expansion under the Biden Administration, where individuals like Melania Trump and Michael Flynn faced account closures for their political stances. High-profile cases, including the cancellation of accounts tied to Donald Trump Jr.’s events and the National Committee for Religious Freedom, illustrate a growing weaponization of the financial system to suppress dissent.
The article distinguishes political debanking from other account closures (e.g., cryptocurrency or financial mismanagement) and critiques the regulatory framework that enables it, marked by opacity, discretion, and a lack of accountability. Despite Supreme Court rulings in NRA v. Vullo and Murthy v. Missouri, judicial remedies remain inadequate against subtle coercion in the modern regulatory state. With banks functioning as quasi-public entities due to extensive government privileges, the article proposes treating them as common carriers, mandating non-discriminatory access to services. It advocates for legislative and regulatory reforms, including reviving the Trump-era “Fair Access to Financial Services” rule, to safeguard free speech against future abuses, warning that without action, debanking will persist as a tool for silencing dissent.

The Economic Structure of Trade Secret Law

Tun-Jen Chiang

The standard economic account of trade secret law focuses on providing incentives for creating new inventions. The incentive-to-invent theory, however, provides little explanation for why the key doctrinal features of trade secret law are structured the way that they are. For example, providing ex ante incentives to invent does not easily explain the requirement that an inventor must take measures to preserve secrecy even after the invention has been created. Nor does it explain why trade secret misappropriation, unlike patent and copyright infringement, requires "improper" conduct by the defendant for liability. In this Article, I give a different theory of trade secret law. In this account, the primary economic purpose of trade secret law is not to preserve the incentive to invent, but to dissuade the possessor of a secret idea from using unreasonable and inefficient self-help countermeasures to protect the secret. As the Article will explain, this anti-countermeasure principle provides an overarching theory to explain the key structural features of trade secret law, in a manner that the incentive-to-invent theory does not.

The Supreme Court’s Mysterious 1920s Due Process Education Trilogy

David E. Bernstein

The Supreme Court's 1920s Education Trilogy cases-Meyer v. Nebraska, Pierce v. Society of Sisters, and Farrington v. Tokushige-were important milestones in American constitutional history.
These decisions protected private schools, religious and otherwise, from the threat of closure in many states. This preserved educational freedom for parents who preferred private education for their children.
As a constitutional matter, the Trilogy became the foundation of a due process jurisprudence that moved beyond liberty of contract, property rights, and police power considerations to a broader protection of fundamental rights.
This Article describes external forces that may have motivated this shift-revulsion at the Ku Klux Klan, backlash against Progressive statism of the sort that demanded the closure of private schools, and the Justices' need to cultivate political allies among ethnic and religious minority populations.
This Article also reviews the idiosyncratic biographical factors that may have led Justice Brandeis to join the majority in Meyer. Brandeis' vote with the majority helped preserve the Education Trilogy cases as precedents that later generations of liberal Justices felt comfortable relying upon.

Racial “Box-Checking” and the Administrative State

David E. Bernstein

This article examines the origins, impact, and consequences of the racial and ethnic classification system established by the U.S. government through Statistical Directive No. 15 in 1978. Originally intended as a bureaucratic tool to assure uniform standards for data collection, these classifications have since profoundly shaped American identity, affirmative action policies, and even scientific research. This article critiques the arbitrary and historically contingent nature of these categories, arguing that they fail to reflect the complexity of racial and ethnic identities; distort research; encourage racial essentialism; and produce misleading data. The article calls for a fundamental overhaul of the classification system, advocating for a more nuanced approach to racial and ethnic categorization, if such government-mandated classifications are to persist at all.

46th Annual Donald A. Giannella Memorial Lecture: Religious Liberty and Nondiscrimination Law

Helen M. Alvaré

Some state and lower federal courts hold that religious vendors refusing to cooperate with the conduct of persons in protected classes are instead engaged in status discrimination in violation of nondiscrimination laws. These opinions often assert that a string of United States Supreme Court decisions requires them to conflate status and conduct. This problem arises with regularity in cases involving religious objections to cohabitation and same-sex weddings. But such conflating not only misreads the texts and legislative histories of the relevant nondiscrimination statutes; it also misreads the Supreme Court opinions upon which it relies, and neglects the only guidelines the Court has articulated regarding conflating status and conduct. It furthermore violates the religious freedom of the defendants for three reasons. It engages in an unconstitutional analysis of whether believers' distinguishing between status and conduct is implausible, impossible, or untrue. It systematically treats the class of religious persons worse than other protected classes. And it refuses to recognize religious institutions' autonomy to pursue their missions by means of personnel choices.
Ordinarily, religious freedom claims in nondiscrimination cases are considered only after a state has found a believer liable for status discrimination, and the objector then raises a right of free exercise. But this Article claims that religious freedom problems arise before this stage of the litigation, when courts are weighing whether to conflate status and conduct to determine if a status nondiscrimination law is possibly violated.

Defining the Human Right Against Cruel Punishment

Craig Lerner

Over the past decade, there have been mounting criticisms of human rights both as an ideology and as a banner for a crusade. Many political conservatives have lambasted the human rights movement as partisan, and some observers have expressed doubts about rights-based activism altogether. Although scholars and lawyers have been roused to a defense, the human rights movement is plainly in the throes of a crisis of self-confidence. This Article argues that some of the most acute challenges to the human rights movement arise from overconfidence and parochialism on the part of human rights advocates. It is today commonplace to make "rights" claims that are unmoored from the philosophical progenitors of the modern liberal tradition. The extravagance of those claims inspires doubts about the viability of human rights as a universal criterion to judge political actors throughout the world, given the vast differences in wealth and culture.
The Article sketches a possible road map to recasting human rights in a way that might garner broader support. It begins by distinguishing between those rights that have a counterpart in American constitutional law and those that do not. The latter rights, which have an aspirational character, are the ones that most often excite criticism. Yet even the more modest rights, which have a counterpart in American constitutional documents, have proven difficult to operationalize as universal human rights. One difficulty is that the rights embodied in American constitutional law are rooted in a history and tradition that span several centuries and channel the scope of those rights. Can human rights, even cast simply as limits on state power, be removed from a particular tradition?
The Article explores this question in the context of the human right to be free from cruel punishment. This right is codified in the U.S. Constitution's Eighth Amendment and the Fifth Article of the Universal Declaration of Human Rights. It captures an intuition that human beings possess an intrinsic dignity that state actors, when inflicting judicial punishment, cannot violate. But even here, where the moral claim is compelling, it proves difficult to define cruelty in a way that does not draw upon a particular tradition. The Article concludes with the suggestion that the human rights movement should be more cautious in its demands of other nations and more tolerant of practices that have been rejected in Western Europe. If the human rights movement allowed for greater experimentation and was less dismissive of approaches that depart from those common in Western Europe today, it might revive as a salutary force.

Takings and Choice of Law After Tyler v. Hennepin County

Eric R. Claeys

This Essay contributes to a symposium on the future of regulatory takings. It focuses on choice of law in eminent domain disputes. When claimants bring eminent domain claims in federal courts, the courts must determine whether the claimants have constitutional "private property" in the entitlements allegedly taken. Should that determination be made with federal law, with the law of the state allegedly taking property, or law from some other source?
The 2023 Supreme Court decision Tyler v. Hennepin County addressed that issue. Under Tyler, it is a federal question whether an eminent domain claimant has constitutional private property. To answer the question, federal courts usually consult the law of the state where the alleged taking took place. But that presumption applies only if state law seems to secure and not to circumvent the federal right. And if that reservation is not satisfied, federal courts may consult a wider pattern of legal sources-Anglo-American history, the general law of the several United States, federal court precedents, and a broader cross-section of law from the state allegedly taking property. That approach resembles the approach taken generally for federal constitutional rights-especially in Indiana ex rel. Anderson v. Brand (1938)-but varies from the general approach in the sources it makes relevant to settle what counts as private property under the Fifth Amendment. This Essay interprets Tyler, and it offers a normative justification for Tyler's approach to choice of law in eminent domain.

Freeing State Courts from SCOTUS

Nelson Lund

Congress is authorized to establish what the Constitution calls "inferior courts." Those courts are required to follow the Supreme Court's interpretations of federal law, at least when the interpretations are issued as holdings rather than dicta. It is almost always taken for granted that state courts have the same duty to accept the Supreme Court's interpretive decisions. This short essay argues that this assumption is misplaced. Under the Supremacy Clause of Article VI, state courts are bound by the supreme law of the land, which includes the Constitution, federal laws made in pursuance of the Constitution, and treaties. The Constitution nowhere characterizes federal judicial opinions as the supreme law of the land and it nowhere characterizes state judicial tribunals as "inferior courts."
Like everyone else, judges are certainly bound by Supreme Court judgments, even seriously mistaken judgments like the one in Dred Scott. But the Supremacy Clause does not say or imply that state judges are bound by that Court's interpretations of federal law. The Constitution leaves them free, and perhaps even obliged, to disregard Supreme Court precedent when it conflicts with what is actually the supreme law of the land.
State court judges can and should exercise their freedom to follow what they believe is the supreme law of the land. This form of judicial independence could have a number of healthy effects on our dual legal systems. And if it had unhealthy effects, Congress could provide a remedy through the writ of habeas corpus and through its control over grants of jurisdiction to the state courts.

Assessing FHFA’s Pilot Program on Automated Title Decisioning: Promoting Competition and Reducing Housing Prices

Andrew Nigrinis, Todd J. Zywicki

Housing affordability remains a critical economic, political, and social issue in the United States. High closing costs, including title insurance, significantly contributes to the problem. The title insurance industry is characterized by limited competition, high consumer search costs, and market structures favoring a few large incumbents. To address these challenges, in 2024 the Federal Housing Finance Agency (FHFA) introduced a pilot program that permits use of automated title insurance underwriting systems to replace traditional title insurance for low-risk refinance transactions.
This study evaluates the economic and consumer benefits of the Title Acceptance Program, focusing on cost savings, enhanced competition, and improved market efficiency. The findings indicate that the program can generate substantial consumer benefits, with estimated annual savings of $96 million and projected lifetime savings between $1.38 billion and $2.19 billion. These savings derive from direct cost reductions, competitive pressure on incumbent pricing, and increased consumer adoption of lower-cost alternatives. Preliminary evidence suggests that automated underwriting maintains loss rates comparable to traditional methods, ensuring financial risk remains low. The program also provides particular benefits to underserved populations, including low-income, rural, and minority consumers. By fostering innovation, enhancing transparency, and reducing costs, the Title Acceptance Program represents a significant step toward addressing housing affordability and advancing competition in the title insurance industry.

Of Sinners & Scapegoats: The Economics of Collective Punishment

J. Shahar Dillbary, Thomas Miceli

"[I]t is better that ten guilty persons escape than that one innocent suffer." 4 WILLIAM BLACKSTONE, COMMENTARIES *358.
"[I]t is better that ten innocent men suffer than that one guilty man escape." Otto von Bismarck, Germany's first chancellor, quoted in John W. Wade, Uniform Comparative Fault Act, 14 FORUM 379, 385 (1979).
Punishing the innocent is considered an "error" that the legal system must minimize. In reality, it is a choice. When evidence points to one of a few suspects as the victim's assailant, society must decide whether to punish all, some, or none. Despite the stated distaste, in many cases lawmakers, regulators, and enforcers elect to sanction a large group of innocent actors. Mass arrests, sobriety checkpoints, profiling, even increasing the number of searches and seizures, and using excessive police force-are all forms of collective punishments. They allow the targeting and sanctioning of an entire population in the name of finding the culprit. The decision is often masked by confusing terms but its effect is the same. The freedoms of many are sacrificed to punish the one. These methods have been widely criticized, but what can economics say on the subject? Are these methods even effective? Under what conditions?
The standard economic model of crime has not offered a clear answer to these questions because it typically focuses on the apprehension and punishment of a single actor-the offender. It therefore does not consider the possibility of punishing a group of innocent actors as a policy tool.
This Article seeks to fill this gap. First, in deviation from previous models, it develops a realistic framework in which the enforcer can choose not only the probability of detection and the nature and severity of the punishment but also the size of the "punishment group." Our model then analyzes the welfare implications of collective punishment and the menu of choices available to enforcers and regulators. To be clear, our intention is not to argue for group punishment as an enforcement strategy. Rather, our goal is to explain the logic of collective liability regimes and unravel the way detection of offenders is currently carried out. Our analysis also shows that in many cases enforcers applying collective sanctions are motivated by self-interest and bigotry. Concerningly, even when the enforcer's goal is to enhance deterrence, the cost on members of the punishment group is discounted or ignored, resulting in a substantial loss of freedoms and welfare. The silver lining is that many of these concerns can be addressed by appropriate reforms.
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