Economics and the mid-life crisis have much in common: Both dwell on foregone opportunities

C'est la vie; c'est la guerre; c'est la pomme de terre . . . . . . . . . . . . . email: jpalmer at uwo dot ca

. . . . . . . . . . .Richard Posner should be awarded the next Nobel Prize in Economics . . . . . . . . . . . .

Saturday, March 19, 2005

The REAL Reason Martha Went to Jail

Even though Martha Stewart has done her time, she still maintains she didn't do the crime. Her case is under appeal, and, quite frankly, I think she has a pretty good chance of winning.
At the federal appeals court in Manhattan, Stewart's lawyer Walter Dellinger argued that his client's conviction should be reversed on two grounds: firstly that one juror lied on his selection questionnaire, and secondly, that an expert government witness allegedly perjured himself.
If Martha Stewart has such a strong case on appeal, why did she go to jail back in October? What I am asking this time is not, "Why was she sent to jail?" Rather, I am asking, "Why would she decide to go to jail when, in all likelihood, she could have avoided it?" Was that the sort of rational maximizing behaviour one might expect from someone who has been painted by the media as being so ruthless and hard-nosed in her business dealings?

One explanation might be that she knew that dragging out the case would merely reduce her fortune, even if she eventually won. Is it possible that she anticipated, ex ante, that going to jail for five months would benefit her corporation as much as it has?

A second explanation, independent from the first, and more devious, is that perhaps she knew she could win on appeal. Think of the possibilities in a suit for malicious prosecution and wrongful imprisonment....

It is not unreasonable that someone in her position and with her abilities would have, at the very least, considered such possibilities last September.
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