University of Chicago Law School Chicago Unbound Journal Articles Faculty Scholarship 2009 The Nanny Corporation M. Todd Henderson Follow this and additional works at: https://chicagounbound.uchicago.edu/journal_articles Part of the Law Commons Recommended Citation M. Todd Henderson, "The Nanny Corporation," 76 University of Chicago Law Review 1517 (2009). This Article is brought to you for free and open access by the Faculty Scholarship at Chicago Unbound. It has been accepted for inclusion in Journal Articles by an authorized administrator of Chicago Unbound. For more information, please contact
[email protected]. The Nanny Corporation M. Todd Hendersont Individuals in common pools-for example, employees in firms and citizens in a ju- risdiction-wantmanagers of those pools to act paternalistically toward others because this lowers the costs of participatingin the pool. The nanny state and, increasingly,the nanny corporation are simply responding to this demand. These two can be thought of as compet- ing in the "marketfor nannyism" to deliver nannyism to individuals who demand it. Where nannyism is inevitable,as it is in a world in which others pay, the question then becomes which of the two sources of nanny rules-the state or the firm-is the most efficient supplier of nannyism. This Article describes numerous reasons why corporate nannies are superior to their state analog&For instance, corporatepolicies are subjected to more instantaneousfeedback from labor markets, which reduces overreachingbut also helps solve informationproblems in ways likely to reduce the sum of decision and error costs There is, however, no theory under which the state or firm will always be superior at imposing nanny limitations on behavior.Because of this, we might expect firms to supply nanny rules when it is efficient for them to do so, say because of better monitoring, lower agency costs; or the like, and not to do so when government rules could be supplied at lower cost for a given efficacy level.