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We show that the fundamental legal structure of a well-written financial contract follows a state-transition logic that can be formalized mathematically as a finite-state machine (specifically, a deterministic finite automaton or DFA). The automaton defines the states that a financial relationship can be in, such as “default,” “delinquency,” “performing,” etc., and it defines an “alphabet” of events that can trigger state transitions, such as “payment arrives,” “due date passes,” etc. The core of a contract describes the rules by which different sequences of events trigger particular sequences of state transitions in the relationship between the counterparties. By conceptualizing and representing the legal structure of a contract in this way, we expose it to a range of powerful tools and results from the theory of computation. These allow, for example, automated reasoning to determine whether a contract is internally coherent and whether it is complete relative to a particular event alphabet. We illustrate the process by representing a simple loan agreement as an automaton.

Contracts help to solve some of the basic challenges of cooperation for humans. One of the insights of economics, since the time of Adam Smith, is that a great deal of human productivity comes from cooperation and collaboration. In the eighteenth Century that astounding Scottish polymath published the foundational book for economics: An Inquiry into the Nature and Causes of the Wealth of Nations. He opens Chapter 1 of The Wealth of Nations by pointing out the importance of the division of labor in human prosperity

This chapter explores how the advances of neuroscience matter to the law. The American tradition of Legal Realism justifies using the lessons of science in formulating policy and doctrine in order to create a better society. Neuroscience has expanded our understanding of the sequence of stimulus, thought, and behavior that is central to how legal rules are designed and applied. While some efforts to put neuroscience to work in law have been more successful than others, the successes are sufficient to validate the core premise that the insights of neuroscience can be useful. Two subjects illustrate this: criminal responsibility and civil capacity. The responsibility discussion has often gone down the wrong road, getting tangled in considerations of free will that are not, in fact, the basis for the existing legal standard. The civil law standard of capacity, which is at the heart of the law of consent, is a more promising target. With realistic expectations, neuroscience has a definite role to play in legal scholarship, doctrine and even individual cases.

Why do good people steal intellectual property? You know who we mean. The person (perhaps even yourself) who feels deep remorse if she mistakenly walks off with your pencil, who takes a wallet she found on the street, full of money but with no identification, to the police, and who without a qualm or any thought of payment, downloads copyrighted music off the internet or from a friend to put onto her iPod. What is going on here? Some suggest ignorance of the law, but that is generally not the case. She knows about copyright. Some suggest a lack of enforcement, but that doesn’t stop her from turning in the wallet. No, something else is going on - some failure of a normally law-abiding, “good” person to feel any compulsion to obey this set of laws....

Comparative legal scholarship will benefit from better explanations of legal development. While the complications of legal systems are a challenge for cause and effect stories, evolutionary theory offers a powerful, yet relatively simple, set of explanatory principles that can be appropriately applied to both doctrinal topics and legal systems as a whole. The necessary starting point for an evolutionary analysis is to examine the three core components of evolution: descent, variation, and selection. Engaging these topics and developing good descriptions for each of them for the targeted system can be very helpful in providing good explanations to the “why” questions of comparative law analysis.

Law and neuroscience (sometimes neurolaw) has become a recognized field of study. The advances of neuroscience are proving useful in solving some perennial challenges of legal scholarship and are leading to applications in law and policy. While caution is appropriate in considering neurolaw approaches, the new knowledge should—and will—be put to use. Areas of special attention in current neurolaw scholarship include (a) techniques for the objective investigation of subjective states such as pain, memory, and truth-telling; (b) evidentiary issues for admitting neuroscience facts and approaches into a court proceeding; (c) free will, responsibility, moral judgment, and punishment; (d) juvenile offenders; (e) addiction; (f) mental health; (g) bias; (h) emotion; and (i) the neuroeconomics of decision making and cooperation. The future of neurolaw will be more productive if challenges to collaboration between lawyers and scientists can be resolved.

Generativity provides a measure of the degree to which a system is open to innovation not necessarily contemplated or understood when the system was created or emerged. In economic analysis, generativity can be distinguished from efficiency as sometimes conflicting goals related to the factors leading to prosperity and growth. The property of generativity in our legal institutions is an important one for increasing the rate of productive innovation, and our laws should be designed with this principle in mind. Generativity does come with potential dangers. Protecting against those dangers, as well as fostering other social goals, will require balancing the institutional factors which promote generativity against those that mitigate risk of harm or that promote social cohesion. Exploring some of the considerations that might weigh in that balancing exercise can inform the debates that swirl around questions of regulation and freedom in our economic life.

We show that the fundamental legal structure of a well-written financial contract follows a state transition logic that can be formalized mathematically as a finite-state machine (also known as a finite state automaton). The automaton defines the states that a financial relationship can be in, such as “default,” “delinquency,” “performing,” etc., and it defines an “alphabet” of events that can trigger state transitions, such as “payment arrives,” “due date passes,” etc. The core of a contract describes the rules by which different sequences of event arrivals trigger particular sequences of state transitions in the relationship between the counter parties. By conceptualizing and representing the legal structure of a contract in this way, we expose it to a range of powerful tools and results from the theory of computation. These allow, for example, automated reasoning to determine whether a contract is internally coherent and whether it is complete relative to a particular event alphabet. We illustrate the process by representing a simple loan agreement as an automaton.

Developments in cognitive neuroscience are providing new insights into the nature of normative judgment. Traditional views in such disciplines as philosophy, religion, law, psychology and economics have differed over the role and usefulness of intuition and emotion in judging blameworthiness. Cognitive psychology and neurobiology provide new tools and methods for studying questions of normative judgment. Recently, a consensus view has emerged, which recognizes important roles for emotion and intuition and which suggests that normative judgment is a distributed process in the brain. Testing this approach through lesion and scanning studies has linked a set of brain regions to such judgment, including the ventromedial prefrontal cortex, orbitofrontal cortex, posterior cingulate cortex and posterior superior temporal sulcus. Better models of emotion and intuition will help provide further clarification of the processes involved. The study of law and justice is less well developed. We advance a model of law in the brain which suggests that law can recruit a wider variety of sources of information and paths of processing than do the intuitive moral responses that have been studied so far. We propose specific hypotheses and lines of further research that could help test this approach.

As cloud computing becomes ubiquitous, the need to fashion better and more finely targeted rules for the cloud takes on increasing urgency. Governance at its best is not an abstraction; rather, it is a set of institutional structures that help people to achieve better outcomes than would occur in a world of unconstrained, self-interested decision making. The rules in contracts, through associations, and by governments can each play a role in creating beneficial governance, provided they are crafted to effectively meet the challenges and characteristics of the activity in question. This paper - still a work in process - explores a number of factors that rule makers should take into account in crafting such a suite of laws and customs. These factors include the structure and history of cloud computing, the ways in which it creates, captures and allocates values, the fundamental challenges of trust for the industry, and the toolkit of private and public rule making that can create structures to help cloud computing reach is potential for providing and distributing benefits. As recent revelations of government surveillance underline, policy-making efforts for cloud computing are rendered particularly complicated by the shifting pattern of convergence and divergence of interests among users, providers, and governments.

Legal practice and legal education are both at challenging inflection points, where much of how and what we do as lawyers and how and what we have taught as legal educators comes under scrutiny. Legal technology is an important factor in driving the challenges we face. As we reform our curriculums in this moment of change, we should be guided by considerations of value added, values added, and economic sustainability. Law and technology is an area that is ripe for expansion in our teaching, with the possibility of satisfying all of these criteria. It also provides ample room for scholarly examination. Creating opportunities for learning how technology is shaping legal practice should be a priority for any school looking to provide a useful education for the lawyers of the present, let alone the future.

Despite recent innovations in entrepreneurial finance, particularly at the early stage of business creation, many new and young companies continue to face hurdles to acquire capital.The Kauffman Foundation addressed current challenges and opportunities in financing entrepreneurial growth, a key driver of job creation and economic expansion, at its fourth annual State of Entrepreneurship Address on February 5, 2013. The event featured remarks from Small Business Administrator Karen Mills, U.S. Senator Jerry Moran and Kauffman President and CEO Tom McDonnell.In his address at the National Press Club in Washington, McDonnell offered policy recommendations to increase financing of entrepreneurial ventures that are featured in a paper on the same topic. Key recommendations include: Crowdfunding: The Securities and Exchange Commission should approve rules under the JOBS Act that encourage experimentation without excessive regulation; IPOs: Greater use of auctions, such as the Dutch auction used by Google, rather than the more common practice of setting a specific price for new stock offerings; Bank Debt: Introduce more flexibility into the regulatory process – such as providing the Federal Reserve, Comptroller of the Currency and Federal Deposit Insurance Corporation the authority to make judgment calls at the local level; Regulation: Allow shareholders of companies the right to vote whether Sarbanes-Oxley accounting rules are necessary; Venture Capital: Create longer-term venture funds that include significant "skin-in-the-game" investment from General Partners, so their interests are aligned with Limited Partner investors over a reasonable time horizon.

L'A. s'interesse aux phenomenes de contamination, de manipulation. Il montre que les individus peuvent etre exposes a des parasites informationnels. Ceux-ci peuvent etre avantageux mais ils peuvent egalement etre prejudiciables. Dans ce dernier cas, ils peuvent affecter l'individu dans son etre comme dans ses actions. Pour eclairer ce type de phenomenes, il etudie les lettres qui circulent par voie postale et qui predisent de la chance a qui les recoit et des maux a qui ne les renvoient pas. Il pose le probleme du role de l'information en ce qui concerne le developpement cognitif. Il reevalue, par ce biais, le debat entre nature et culture

The United States economy is struggling to recover from its worst economic downturn since the Great Depression. After several huge doses of conventional macroeconomic stimulus - deficit-spending and monetary stimulus - policymakers are understandably eager to find innovative no-cost ways of sustaining growth both in the short and long runs. In response to this challenge, the Kauffman Foundation convened a number of America’s leading legal scholars and social scientists during the summer of 2010 to present and discuss their ideas for changing legal rules and policies to promote innovation and accelerate U.S. economic growth. This meeting led to the publication of Rules for Growth: Promoting Innovation and Growth Through Legal Reform, a comprehensive and groundbreaking volume of essays prescribing a new set of growth-promoting policies for policymakers, legal scholars, economists, and business men and women. Some of the top Rules include: • Reforming U.S. immigration laws so that more high-skilled immigrants can launch businesses in the United States. • Improving university technology licensing practices so university-generated innovation is more quickly and efficiently commercialized. • Moving away from taxes on income that penalize risk-taking, innovation, and employment while shifting toward a more consumption-based tax system that encourages saving that funds investment. In addition, the research tax credit should be redesigned and made permanent. • Overhauling local zoning rules to facilitate the formation of innovative companies. • Urging judges to take a more expansive view of flexible business contracts that are increasingly used by innovative firms. • Urging antitrust enforcers and courts to define markets more in global terms to reflect contemporary realities, resist antitrust enforcement from countries with less sound antitrust regimes, and prohibit industry trade protection and subsidies. • Reforming the intellectual property system to allow for a post-grant opposition process and address the large patent application backlog by allowing applicants to pay for more rapid patent reviews. • Authorizing corporate entities to form digitally and use software as a means for setting out agreements and bylaws governing corporate activities. The collective essays in the book propose a new way of thinking about the legal system that should be of interest to policymakers and academic scholars alike. Moreover, the ideas presented here, if embodied in law, would augment a sustained increase in U.S. economic growth, improving living standards for U.S. residents and for many in the rest of the world.

This paper has four goals. The first is to provide an overview of the emerging sub-discipline of “Neurolaw.” Incorporating the insights of neuroscience into legal analysis and policy-setting is a rapidly expanding enterprise. The second goal is to focus on game theory and mechanism design, which provide useful analytic starting points for applying cognitive neuroscience in a social context. This leads to the third goal. This paper suggests that the formal structures of the mechanisms of sociality may be represented in the structures of the cognitive processes which implement them. I do not mean to suggest that there is a simple and direct homology between such mechanisms and any particular physical structures within the brain. It is widely recognized, however, that the brain is a computational device, and the brain processes which carry out a particular type of computation will necessarily reflect the requirements of the computation being made. Finally, the paper suggests an application of this mechanism-based approach to a particular instance: understanding the nature of human moral commitment.

To investigate how individual differences in moral judgment competence are reflected in the human brain, we used event-related functional magnetic resonance imaging, while 23 participants made either socio-normative or grammatical judgments. Participants with lower moral judgment competence recruited the left ventromedial prefrontal cortex and the left posterior superior temporal sulcus more than participants with greater competence in this domain when identifying social norm violations. Moreover, moral judgment competence scores were inversely correlated with activity in the right dorsolateral prefrontal cortex (DLPFC) during socio-normative relative to grammatical judgments. Greater activity in right DLPFC in participants with lower moral judgment competence indicates increased recruitment of rule-based knowledge and its controlled application during socio-normative judgments. These data support current models of the neurocognition of morality according to which both emotional and cognitive components play an important role.

Consent, a critical concept for law, often rests upon the ability of people to create binding changes of legal status, rights, and obligations. The law typically presumes complete and un-buffered adult capacity for binding legal consent. However, the realities of flawed information, inexperience, a lack of attention, and evidence of human limitation frequently refute notions of complete capacity. This Article posits that the law should reserve the presumption of complete and unfettered adult capacity for special cases. A more nuanced view of our actual capacities rests, in part, on the understanding that neuroscience and psychosocial evidence provides. This perspective suggests that jurists should match rules and jurisprudential approaches to the variable capacities that people exhibit in different contexts and stages of life. The strategic recognition and use of neurojuridical tools identifies at-risk parties and circumstances and sheds light on the problematic nature of consent offered on some occasions. Such a view helps jurists to develop and deploy effective enhancers and buffers around consent that reflect a more realistic treatment of capacity. This Article examines the myth of consent to add some of the tools and insights of cognitive neuroscience and social psychology to the traditional staples of psychology, economics, politics, and philosophy. It proffers innovative approaches, such as the framework of legal assent, explored in prior work and summarized in this Article. Legal reforms prompted by new defaults will facilitate optimum consensual relations and ultimately foster the Pareto enhancing goals, now mistakenly linked to a more radical vision of consent.

Normative judgment – the evaluation of actions with respect to social norms and values – entails a number of processes represented by a distributed network of brain regions. People differ with respect to their competence to make moral judgments. In this study we investigated how individual differences in this domain modulate neural correlates of simple normative judgments. Sentences including violations of social norms and grammatical rules were presented visually in a mixed blocked/ event-related design. Social norm violations were designed not to create emotional arousal. 23 participants decided whether sentences were normatively or grammatically correct while their brain activity was monitored using functional magnetic resonance imaging. To assess emotional arousal skin conductance was recorded. Individual differences in moral judgment competence were assessed using the Moral Judgment Test (C-score; Lind, 2001). Normative judgments compared to grammatical judgments resulted in activation of temporal poles, left ventromedial prefrontal cortex, left orbitofrontal cortex, and left posterior Sulcus temporalis superior (mixed effects, p

Cognitive neuroscience is challenging the Anglo-American approach to criminal responsibility. Critiques, in this issue and elsewhere, are pointing out the deeply flawed psychological assumptions underlying the legal tests for mental incapacity. The critiques themselves, however, may be flawed in looking, as the tests do, at the psychology of the offender. Introducing the strategic structure of punishment into the analysis leads us to consider the psychology of the punisher as the critical locus of cognition informing the responsibility rules. Such an approach both helps to make sense of the counterfactual assumptions about offender psychology embodied in the law and provides a possible explanation for the human conviction of the existence of free will, at least in others.