Default Policy Research Articles

Copyright and Digital Art: Through the Looking Glass

Copyright promotes creativity. Copyright hinders creativity. These statements reflect the contested nature of copyright, today more than ever before. The last twenty years have seen rapid advancements in digital technologies and information and communication systems. These advancements have had profound effects on creative activities: the process of production, dissemination, exploitation and consumption of creative output has changed; opportunities for novel ways and forms of creation, representation and manipulation of information have arisen; and, the attitudes and behaviour of creators and consumers of creative output and a host of intermediary participants in the process have transformed. As a result, copyright law has faced considerable and persistent practical challenges in adapting its contours to the digital environment. More importantly, the role of copyright, as a framework for regulating creative activities, has also come under scrutiny. What then is the role of copyright law in the everyday context of new and emerging creative activities -- that are borne out of the very copying and distribution technologies that have challenged copyright? How do the creative practitioners involved in such activities relate to copyright law? This chapter explores the interaction between copyright and the everyday life of artists in the digital environment. It focuses on the role of copyright in the every day context of a specific creative activity: digital art practice. It draws upon the findings from a qualitative empirical study, consisting of in-depth interviews with digital artists in the UK and Ireland, to peer ‘through the looking glass’ at the perspectives and practices of digital artists and finds ‘a messy wonderland of copyright in action’. A wonderland where: artists challenge and resist the law’s default positions and policy’s dominant presumptions, artists are informed and influenced by multiple elements and contextual factors in their process of meaning-making and decision making about copyright, and, artists face moral dilemmas and are pulled in different directions with respect to their perspectives and decisions regarding copyright.Section II of this chapter contextualizes the study and outlines the methodology employed. Section III and IV presents some of the findings from the study to demonstrate how the interviewees were challenging ownership and valuing authorship and illustrate how a variety of factors influenced the artists’ understandings around copyright. Section V provides concluding remarks.

Separation Without Exclusion in Financial Insurance

AbstractThis article develops a model of linearly priced financial insurance sold by default‐prone insurers. It shows that when insurers differ in their default probabilities there can exist equilibria in which different risk types partially or completely self‐sort into insurance contracts offered by different insurers. Partial separation can occur when insurer default and insurance risks are uncorrelated. Full separation is possible when they are correlated. For example, low‐risk insured parties may match with higher default‐risk insurers, while high‐risk insured parties match with lower default‐risk insurers.

The Geographies of Policy Translation: How Nudge Became the Default Policy Option

This paper examines the emergence of libertarian paternalism or ‘nudge’ as a rationale of government in the UK and charts the way in which this development has been enabled by, and has enabled, a process of policy translation. We examine: the reasons for the emergence of libertarian paternalism in the UK; the processes that have enabled libertarian paternalism to become a significant way of framing policy in the UK for both the New Labour and the Coalition administrations; the way in which this set of policy initiatives has been predicated upon a process of social and spatial embedding that has seen it become interpreted as a meaningful and default solution to a whole host of social ills. We conclude by arguing that there is a need to appreciate both the political malleability of libertarian paternalism as a concept and the complex geographies that have enabled it to assume political significance in the UK.

Incentive Learning in Monte Carlo Tree Search

Monte Carlo tree search (MCTS) is a search paradigm that has been remarkably successful in computer games like Go. It uses Monte Carlo simulation to evaluate the values of nodes in a search tree. The node values are then used to select the actions during subsequent simulations. The performance of MCTS heavily depends on the quality of its default policy, which guides the simulations beyond the search tree. In this paper, we propose an MCTS improvement, called incentive learning, which learns the default policy online. This new default policy learning scheme is based on ideas from combinatorial game theory, and hence is particularly useful when the underlying game is a sum of games. To illustrate the efficiency of incentive learning, we describe a game named Heap-Go and present experimental results on the game.

Monolingualism in a historically Black South African University: A case of inheritance

The advent of the 11 official language policy in South Africa presented institutions of higher learning with opportunities to become multilingual universities in line with trends elsewhere. On the one hand, a number of historically White universities (HWUs) started introducing university-wide language policy initiatives and discussions, which are, however, still in their infancy. On the other hand, historically Black universities (HBUs) seem to have almost regressed by going for English-only default policy practices, regardless of the widely reported low literacy rates among their student populations. In this paper, we present a case study of a historically Black university with a specific focus on its non-policy situation to draw generalizations that apply to other HBWs in South Africa. Using the concept of “multilingual universities” and its typologies that are grounded in Bourdieu's cultural capital framework, we show disparities between what is feasible under the university's linguistic profile and the present monolingual default practices. While highlighting the literacy “costs” of missing the multilingual capital, we argue for the benefits of a trifocal language policy practice where the university can serve as a catalyst for best multi-literacy development practices. In conclusion, we offer recommendations for multilingual development in higher education and possible areas for further research.

Credit risk and asymmetric information: A simplified approach

We present a simple model for risky, corporate debt. Debtholders and equityholders have incomplete information about the financial state of the debt issuing company. Information is incomplete because it is delayed for all agents, and it is asymmetrically distributed between debtholders and equityholders. We solve for the equityholders' optimal default policy and for the credit spreads required by debtholders. Delayed information accelerates the equityholders' optimal decision to default. Interestingly, this effect is small, implying only a small impact on credit spreads. Asymmetric information, however, has a major impact on credit spreads. Our model predicts high credit spreads for short-term debt, as observed empirically in credit markets.

Government Shutdowns, the New Fiscal Politics, and the Case for Default Budgets

In nearly every area of law and governance, default policies exist when lawmakers cannot pass new legislation — typically, the status quo simply remains in effect. To its detriment, U.S. budget making at both the state and federal levels lacks effective defaults. If a new budget isn’t passed by year end, there is no budget. This lack of defaults, coupled with a dysfunctional era of budgetary politics, has led to a number of recent high-profile and costly state and federal government shutdowns.To date, legal scholarship has failed to address both the causes and costs of government shutdowns and near-shutdowns, and thus has also failed to consider possible solutions to prevent them. This Article seeks to fill this gap, exploring the history and sources of recent government shutdowns. Government shutdowns are the result of a perfect storm of contemporary politics: acrimonious budget making characterized by partisan brinkmanship, game-of-chicken-style negotiation strategies, and strong anti-tax sentiment among many conservative legislators. Drawing on political science work on legislative negotiation theory, this Article explains how these new fiscal politics result in regular budget negotiation failures, greatly increasing the risk of costly government shutdowns or near-shutdowns. From this diagnosis of budgetary dysfunction, this Article advocates for the adoption of default budget policies to maintain government operations in the event that legislators fail to pass a timely budget. This Article explains how default budget policies might be implemented to avert shutdowns and to stabilize the budget-making process. Drawing upon the experiences of several states with automatic continuing appropriations provisions, and the federal experience with sequestration, we explore how default budget policies might work in practice. Properly enacted, default budget policies have the potential to mitigate the harmful consequences of budget negotiation failures and to restore sanity to this era of new fiscal politics.

Candidate Entry and Political Polarization: An Antimedian Voter Theorem

We study a citizen‐candidate‐entry model with private information about ideal points. We fully characterize the unique symmetric equilibrium of the entry game and show that only relatively “extreme” citizen types enter the electoral competition as candidates, whereas more “moderate” types never enter. It generally leads to substantial political polarization, even when the electorate is not polarized and citizens understand that they vote for more extreme candidates. We show that polarization increases in the costs of entry and decreases in the benefits from holding office. Moreover, when the number of citizens goes to infinity, only the very most extreme citizens, with ideal points at the boundary of the policy space, become candidates. Finally, our polarization result is robust to changes in the implementation of a default policy if no citizen runs for office and to introducing directional information about candidates’ types that is revealed via parties.

An equation-based Heap Sizing Rule

For garbage-collected applications, dynamically-allocated objects are contained in a heap. Programmer productivity improves significantly if there is a garbage collector to automatically deallocate objects that are no longer needed by the applications. However, there is a run-time performance overhead in garbage collection, and this cost is sensitive to heap size H: a smaller H will trigger more collection, but a large H can cause page faults, as when H exceeds the size M of main memory allocated to the application.This paper presents a Heap Sizing Rule for how H should vary with M. The Rule can help an application trade less page faults for more garbage collection, thus reducing execution time. It is based on a Heap-Aware Page Fault Equation that models how the number of page faults depends on H and M. Experiments show that this rule outperforms the default policy used by JikesRVM’s heap size manager. Specifically, the number of faults and the execution time are reduced for both static and dynamically changing M.

Effects of scheme default insurance on decisions and financial outcomes in defined benefit pension schemes

AbstractA simulation investigation of the effect of default insurance on the optimal equity allocation and deficit spread period of a model defined benefit pension scheme is performed, using the old and new frameworks of the Pension Protection Fund in the U.K. as a starting point. The old default insurance levy framework encourages an increase in the allocation to equities, creating an indirect effect of increased deficits. The new framework reverses the effect to a reduction in the allocation to equities, thus reducing deficits. In addition the gaming element of default insurance is investigated and found to significantly increase optimal equity allocation and deficit spread period, leading to a significant increase in deficits.

Feedback Effects of Default Insurance for Defined Benefit Schemes

A simulation investigation of the effect of default insurance on the optimal equity allocation and deficit spread period of a model defined benefit pension scheme is performed, using the old and new frameworks of the Pension Protection Fund in the U.K. as a starting point. The old default insurance levy framework encourages an increase in the allocation to equities, creating an indirect effect of increased deficits. The new framework reverses the effect to a reduction in the allocation to equities, thus reducing deficits. In addition the gaming element of default insurance is investigated and found to significantly increase optimal equity allocation and deficit spread period, leading to a significant increase in deficits.

Sovereign Credit Risk and Government Effectiveness

This paper investigates the relation between the effectiveness of a country's government and its creditworthiness. Employing a sample of 75 developed and emerging countries over the 1996-2011 period, we find that more effective government helps reduce sovereign credit risk. This effect strengthens for countries exhibiting severe default risk, high levels of ineffectiveness, and poor economic conditions. We formulate a theoretical explanation for these findings using a structural model of sovereign credit risk in which governments adjust default and debt policies based on their abilities to efficiently collect and use fiscal revenue. The theory posits that countries with more effective governments have less incentive to default and thus benefit from narrower sovereign credit spreads, although they may choose higher levels of indebtedness.

Incorporating Employee Heterogeneity into Default Rules for Retirement Plan Selection

This paper examines the effect of incorporating individual-level heterogeneity into default rules for retirement plan selection. We use data from a large employer that transitioned from a defined benefit (DB) plan to a defined contribution (DC) plan, offering existing employees a choice of plans. Employees who did not make a choice were defaulted to switch to the DC plan if under age 45 or remain in the DB plan if age 45 or older. Using a regression discontinuity framework, we estimate that the default increased the probability of enrolling in one plan over the other by 60 percentage points. We develop a framework to solve for the optimal age-based default rule analytically and use our results to empirically evaluate the optimal age-based default rule for the firm in our setting. We show that for a broad range of levels of risk aversion, conditioning the default for the choice between pension plans on age can substantially improve outcomes relative to a uniform default policy. Our results suggest that considerable welfare gains are possible by varying defaults by observable characteristics.

Default Options and Social Welfare: Opt In versus Opt Out

We offer a social-welfare comparison of the two most prominent default options – opt in and opt out – using a two-period model of localized competition. We demonstrate that when consumers stick to the default option, the prevailing default policy shapes firms' ability to collect and use customer information, and affects their pricing strategy and entry decision differently. The free-entry analysis reveals that fewer firms enter under opt out as competition becomes harsher, and that opt out is the socially preferred default option.

Credit Portfolios, Credibility Theory, and Dynamic Empirical Bayes

We begin with a review of (a) the pricing theory of multiname credit derivatives to hedge the credit risk of a portfolio of corporate bonds and (b) current approaches to modeling correlated default intensities. We then consider pricing of insurance contracts using credibility theory in actuarial science. After a brief discussion of the similarities and differences of both pricing theories, we propose a new unified approach, which uses recent advances in dynamic empirical Bayes modeling, to evolutionary credibility in insurance rate-making and default modeling of credit portfolios.

Shifting Administrative Burdens: An Examination of Iowa's Medicaid Payment Rules on Specialized Wheelchairs for Nursing Facility Residents

This white paper describes research done in the University of Iowa College of Law Clinical Law Program on Iowa's Medicaid payment rules for assistive technology for nursing home residents. Customized power wheelchairs provide elderly and disabled nursing facility residents with the freedom of independent mobility. Without this specialized equipment, residents may be bedridden, reliant on facility staff for mobility, and at risk for developing painful and dangerous pressure ulcers. In Iowa, and in other states with the minority rule, DHS Medicaid rules place the initial burden of paying for this expensive equipment on the nursing facilities. Often, facilities refuse to pay or simply cannot afford to do so, leaving residents without medically necessary life-improving equipment. Minnesota’s rule, on the other hand, allows a Medicaid recipient to receive direct reimbursement so long as the requested item is medically necessary and will be used exclusively by that recipient. A majority of states have adopted a rule like Minnesota’s. The majority rule is more efficient and avoids creating an adversarial relationship between the care giving facility and the resident. Medicaid recipients in Iowa nursing facilities can receive direct reimbursement only after applying for an exception to the default policy. Iowa DHS should embrace the exception as the rule and improve its Medicaid wheelchair reimbursement policy for nursing facility residents by adopting the superior majority payment rule.

The meaning of default options for potential organ donors

Rates of participation in organ donation programs are known to be powerfully influenced by the relevant default policy in effect ("opt-in" vs. "opt-out"). Three studies provide evidence that this difference in participation may occur in part because the requirement to opt-in or opt-out results in large differences in the meaning that individuals attach to participation. American participants in Study 1 rated participation as a significantly more substantial action when agreement was purportedly obtained under opt-in rather than opt-out conditions, and nonagreement as a greater abrogation of responsibility when that decision was made under opt-out rather than under opt-in conditions. Study 2 replicated these findings with respondents who live in Germany, which employs an opt-in donation policy, and in Austria, which has an opt-out policy. Study 3 required American participants to rate various actions that differ in the effort and self-sacrifice they demand. As predicted, the placement of organ donation on the resulting multidimensional scaling dimension differed significantly depending on whether it purportedly was made in an opt-in country (where it was considered roughly akin to giving away half of one's wealth to charity upon one's death) or an opt-out country (where it fell between letting others get ahead of one in line and volunteering some time to help the poor). We discuss the relationship between this change of meaning account and two other mechanisms-behavioral inertia and implicit norms-that we believe underlie the default effect in decision making and other effects of policies designed to influence decision-makers.

Principles, Politics, and Prudence: Libya, the Responsibility to Protect, and the Use of Military Force

RESOLUTION 1973 (17 MARCH 2011) WAS THE FIRST TIME THE UNITED NATIONS Security Council authorized the use of military force for human protection purposes against a functioning de jure government. As such, it represents a significant development in the international politics of military force. But what are its likely consequences and how did it come about? We submit that Resolution 1973 and the subsequent enforcement operations, Odyssey Dawn and Unified Protector, were partly facilitated by the developing principle and practice of the Responsibility to Protect (R2P). Despite an increasing number of rhetorical commitments made by international institutions and many governments to prevent mass atrocities in the post--Cold War era, the use of force for human protection purposes remained severely constrained by principled objections rooted in international law and moral differences, the low political payoffs and potentially grave risks associated with humanitarian war, and the combination of difficult operational dilemmas and an absence of clear guidance about the strategies and tactics most likely to have positive effects in different circumstances. (1) Historically, these obstacles coalesced to produce a default policy environment that was strongly averse to the use of force to prevent or end the commission of genocide, war crimes, ethnic cleansing, or crimes against humanity (hereafter, genocide and mass atrocities). We submit that R2P has helped mitigate these three types of constraints, albeit unevenly, making UN-authorized humanitarian military intervention both politically possible in Libya and more likely in other similar cases. (2) First, R2P has largely resolved principled debate about whether international society should become engaged in such crises and replaced it with debates about how to best protect populations from grave abuses. Within international society, this principle is underscored by a widely shared understanding of the need for Security Council authorization for any use of military force. Second, R2P has helped to change international political calculations by establishing shared expectations and common interests, though of course national interests and domestic politics continue to shape decisions about using force. Third, it has provided a catalyst for more creative thinking about operational issues, most notably supporting moves toward using a broader range of measures to coerce and induce behavioral change and deepening understanding of the range of potential military measures and associated pitfalls. Nevertheless, while agreement on principles is important, reaching consensus on how to consistently apply those principles in response to specific cases is far more difficult, as the case of Syria in 2012 demonstrates only too well. (3) Moreover, while the use of force to protect populations from genocide and mass atrocities has become more likely, it is still rare and is likely to remain so for the foreseeable future. (4) To substantiate these claims, we begin this article by summarizing the road to the use of force in Libya, focusing on the forging of international consensus around Resolution 1973. Next, we contextualize Resolution 1973 by outlining the main principled, political, and prudential obstacles to using force for human protection purposes. In the final section, we revisit these obstacles and explore R2P's role in reshaping the way they are conceptualized and, in turn, the politics of using force to protect populations from genocide and mass atrocities. Libya: The Road to Humanitarian War On 19 March 2011, military forces from France, Canada, the United Kingdom, and the United States struck the air defenses and soldiers of Muammar Gaddafi's regime in Libya. These countries led a coalition of states with the expressed aim of enforcing the objectives set out by UN Security Council Resolution 1973, principally the operation of a no-fly zone over Libya, imposition of an arms embargo, and the protection of civilians on the ground. …

Cutting Across Linguistic and Regulatory Divides : on Covered Credit Default Swaps and Insurance

Cutting Across Linguistic and Regulatory Divides : on Covered Credit Default Swaps and Insurance

RETHINKING DYNAMIC CAPITAL STRUCTURE MODELS WITH ROLL‐OVER DEBT

Dynamic capital structure models with roll‐over debt rely on widely accepted arguments that have never been formalized. This paper clarifies the literature and provides a rigorous formulation of the equity holders’ decision problem within a game theory framework. We spell out the linkage between default policies in a rational expectations equilibrium and optimal stopping theory. We prove that there exists a unique equilibrium in constant barrier strategies, which coincides with that derived in the literature. Furthermore, that equilibrium is the unique equilibrium when the firm loses all its value at default time. Whether the result holds when there is a recovery at default remains a conjecture.