Cornell Law Review Volume 97 Issue 5

Uncertainty, Dangerous Optimism, and Speculation: An Inquiry into Some Limits of Democratic Governance

People are often optimistic. Nearly fifty percent of marriages end in divorce, but one survey found that 100 percent of individuals planning to get married believed they would never get divorced. Most people think they drive better than the average driver, and at one university, ninety-four percent of professors placed themselves in the top fifty percent in terms of teaching skills. We often seem to think we are like the youth of Garrison Keillor’s fictional hometown Lake Wobegon, where “all the children are above average.”

This is not always a bad thing. Optimism can be advantageous. Without optimism, Columbus might not have discovered the New World and Steve Jobs might not have started Apple Computer in his parents’ garage. Indeed, without optimism, many of us might not be able to rouse ourselves from our beds each morning to face the day. But optimism poses dangers as well. This Article examines one of the more costly and intractable problems that can arise from optimism: the problem of regulating optimism-driven speculation in financial markets.


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