Fictitious Fraud: Economics and the Presumption of Reliance

In the popular imagination, legal proceedings and their rules of law are thought of as paths to unalloyed truth. Both practitioners and scholars know this is often not the case because the law is, as are other domains, riddled with fictions. Indeed, the law sometimes borrows fictions from other domains to help it achieve results that would otherwise be unobtainable. One such place is securities law, in which courts in the United States have borrowed the concept of the ‘efficient market’ from economics to make fraud class actions possible. But that concept is—if not wholly—at least in good measure fictional.