Originally uploaded at SSRN.


This article explores the problem of risk perception and regulatory loopholes in the unique era of corporate governance that followed Enron and other high-profile corporate scandals. The article draws on behavioral law and economics theory to examine pressing issues in U.S. welfare policy reform. The current Administration's domestic agenda features proposals to privatize traditional government welfare programs, including Social Security and Medicare. Those proposals rely on market competition and other profit incentives to improve quality and reduce program costs. The article traces a detailed case study of a prominent for-profit hospital corporation, the impact of public perceptions of corporate wrongdoing, and the regulatory response that followed. The piece then offers key insights for upcoming policy debates over health care delivery, specifically, and regulation of private markets, generally.