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More Talk, Less Conflict: Evidence from Requiring Informal Discovery Conferences Am. Law Econ. Rev. (IF 0.96) Pub Date : 2024-01-16 Eric Helland, Minjae Yun
Discovery is the formal process of exchanging information under the supervision of the courts. Since managing discovery is costly, courts have implemented case management techniques to reduce motion practice in discovery. This study examines whether case management techniques can reduce the likelihood of a discovery dispute. We attempt to untangle the impact of specific judges from the use of a particular
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Does the Fundamental Transformation Deter Trade? An Experiment Am. Law Econ. Rev. (IF 0.96) Pub Date : 2024-01-08 Christoph Engel, Eric Helland
Oliver Williamson has coined the term “fundamental transformation.” It captures the following situation: before they strike a deal, buyers and sellers are protected by competition. Yet, thereafter, they find themselves in a bilateral monopoly. With common knowledge of standard preferences, both sides would conclude the contract regardless if its expected value exceeds their outside options. We run
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Accuracy and Preferences for Legal Error Am. Law Econ. Rev. (IF 0.96) Pub Date : 2024-01-04 Murat C Mungan, Marie Obidzinski, Yves Oytana
Legal procedures used to determine liability trade-off type-1 errors (e.g., false convictions) against type-2 errors (e.g., false acquittals). After noting that people’s relative preferences for type-1 errors (compared to type-2 errors) appear to be negatively correlated with technological advancements, we study how the accuracy of evidence collection methods may affect the trade-off between these
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A Case for Pay Secrecy Am. Law Econ. Rev. (IF 0.96) Pub Date : 2024-01-04 Tomer Blumkin, David Lagziel, Yoram Margalioth
In this paper, we study a labor market setup in which workers exhibit relative remuneration concerns with respect to their peers. We first characterize the optimal labor contract offered by the firm and provide necessary and sufficient conditions for the desirability of incorporating pay-secrecy clauses in such a contract. We then demonstrate that, in contrast to conventional wisdom viewing wage-secrecy
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Imperfect Information About Consumer Rights: Implications for Efficiency and Distribution Am. Law Econ. Rev. (IF 0.96) Pub Date : 2024-01-04 Florian Baumann, Tim Friehe, Tobias Wenzel
This paper shows that the provision of consumer rights can induce unintended distributional effects and may, under specific circumstances, even decrease welfare when some consumers are unaware of these rights. We find that consumers who are uninformed about a mandated warranty may demand excessively safe products when the share of informed consumers is high. In other circumstances, uninformed consumers
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Gender Discrimination in Online Markets Am. Law Econ. Rev. (IF 0.96) Pub Date : 2023-09-13 Christopher A Cotropia, Jonathan S Masur, David L Schwartz
We study whether a seller’s gender impacts the bargained-for price in a product market, specifically baseball cards. We isolate the seller’s gender using an online transaction exposing the buyer to the seller’s gender via the seller’s hand and name. In both a field experiment, in which we actually sell cards on eBay, and a laboratory experiment, in which we conduct surveys via Amazon Mechanical Turk
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On Economic Theories of Criminal Punishment: Pricing, Prevention, or Proportionality? Am. Law Econ. Rev. (IF 0.96) Pub Date : 2023-07-20 Thomas J Miceli
This article examines competing economic theories of crime and punishment within a common analytical framework. The theories—due to Becker (1968. “Crime and Punishment: An Economic Approach,” 76 Journal of Political Economy 169–217), Posner (1985. “An Economic Theory of the Criminal Law” 85 Columbia Law Review 1193–231), and Adelstein (1981. “Institutional Structure and Evolution in the Criminal Process
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Estimating Firms’ Responses to Securities Regulation Using a Bunching Approach Am. Law Econ. Rev. (IF 0.96) Pub Date : 2023-06-08 Dhammika Dharmapala
Many important provisions of US securities law—most notably, crucial elements of the Sarbanes-Oxley (SOX) legislation enacted in 2002—apply only to firms that have a public float of at least $75 million. Public float (i.e., the market value of shares held by non-insiders) is not comprehensively reported in standard databases, so I “scrape” public float data from firms’ 10-K filings for an extensive
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Quasi-Experimental Evidence on the Impact of State Recycling and Deposit Laws: Household Recycling Following Interstate Moves Am. Law Econ. Rev. (IF 0.96) Pub Date : 2023-04-10 W Kip Viscusi, Joel Huber, Jason Bell
This article estimates the effects on recycling behavior of state recycling laws and deposit laws based on changes in household recycling before and after interstate moves. Estimates from a national panel dataset of 1,498 households who moved between states provide a quasi-experimental test otherwise not possible given long-term stability of such laws in any state. Compared to national average recycling
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Information Costs and the Civil Justice System Am. Law Econ. Rev. (IF 0.96) Pub Date : 2023-03-18 Keith N Hylton
Litigation is costly because information is not free. Given that information is costly and perfect information prohibitively costly, courts will occasionally err. Finally, the fact that information is costly implies an unavoidable degree of informational asymmetry between disputants. This paper presents a model of the civil justice system that incorporates these features and probes its implications
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Lie Detection: A Strategic Analysis of the Verifiability Approach Am. Law Econ. Rev. (IF 0.96) Pub Date : 2022-07-06 Konstantinos Ioannidis, Theo Offerman, Randolph Sloof
The Verifiability Approach is a lie detection method based on the insight that truth-tellers provide precise details whereas liars sometimes remain vague to avoid being exposed. We provide a game-theoretic foundation for the strategic effect that underlies this approach. We consider a speaker who wants to be acquitted and an investigator who prefers to find out the truth. The investigator can verify
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The Origins of the Market for Corporate Law Am. Law Econ. Rev. (IF 0.96) Pub Date : 2022-04-01 Sarath Sanga
Abstract I study the origins of the market for corporate charters and the emergence of Delaware as the leader of this market. Specifically, I assemble new data on 19th- and 20th-century corporations to evaluate two widely held beliefs: (1) the U.S. Supreme Court is responsible for enabling a national market for corporate charters in the 19th century and (2) Delaware became the leader in this market
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Coalitions among Plaintiffs’ Attorneys in Securities Class Actions Am. Law Econ. Rev. (IF 0.96) Pub Date : 2022-04-01 Stephen J Choi,Jessica Erickson,Adam C Pritchard
Abstract This article examines contests among plaintiffs’ law firms to become lead counsel in securities fraud class actions. We study lead counsel appointments in all federal securities class actions from 2005 to 2016. Although the typical class action has several lead plaintiff motions, many of these motions will either withdraw or combine before the judge chooses the lead plaintiff and lead counsel
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Indemnification, Monitoring, and Competition: Evidence from R&D Contracts Am. Law Econ. Rev. (IF 0.96) Pub Date : 2022-04-01 Di Guo,Xinyu Hua,Kun Jiang
Abstract This article examines the adoption of indemnification clauses in research and development (R&D) contracts, in which a firm commits to reimbursing its agent against liabilities and legal costs. Indemnification achieves efficient risk sharing but dilutes the agent’s incentives to take precautions. Such incentives may be restored if the firm offers contingent indemnification and monitors the
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School Finance Reforms and Juvenile Crime Am. Law Econ. Rev. (IF 0.96) Pub Date : 2022-04-01 Hamid Noghanibehambari
Abstract Several states initiated school finance reforms during the post-1990s, commonly named the “adequacy” era, with the primary purpose of providing adequate funding for low-income school districts. This article uses the space–time variation in court-ordered reforms in this period as shocks to school spending and investigates its effects on juvenile arrest rates and risky behaviors. Using a 2SLS-DDD
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Can Sanctuary Policies Reduce Domestic Violence? Am. Law Econ. Rev. (IF 0.96) Pub Date : 2022-03-07 Catalina Amuedo-Dorantes,Monica Deza
Abstract Domestic violence remains a serious public problem, especially in Hispanic communities, where one in three women are victims of domestic violence in their lifetimes. Yet $<$50$\%$ of victims report the incidents, often because of concerns over police officers asking about their immigration status of the status of their family members. We assess the extent to which the implementation of sanctuary
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Reputational versus Beckerian Sanctions Am. Law Econ. Rev. (IF 0.96) Pub Date : 2021-12-07 Claude Fluet, Murat C Mungan
Legal sanctions cause reputational losses in addition to the direct losses. Lowering the probability of punishment reduces these reputational losses by diluting the informational value of verdicts. These considerations better align the positive as well as normative implications of law enforcement models with intuition and empirics: violations of the law are more responsive to the certainty rather than
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Quality of Evidence and Legal Decision-Making Am. Law Econ. Rev. (IF 0.96) Pub Date : 2021-12-06 Juan José Ganuza, Fernando Gomez, Jose Penalva
We analyze a setting where the court has to impose liability with imperfect evidence on the defendant’s actions, and where the court is concerned about both deterrence and judicial errors. We provide a formal definition of the quality of evidence that allows us to compare evidence from very different sources and of a very different nature in terms of informativeness. When imposing liability, the court’s
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Settlement Negotiations with Reference-dependent Preferences Am. Law Econ. Rev. (IF 0.96) Pub Date : 2021-12-03 Christoph Rössler, Tim Friehe
This article analyzes pretrial bargaining between litigants with reference-dependent preferences. We build on Bebchuk (1984, “Litigation and Settlement under Imperfect Information,” 15 Rand Journal of Economics 404–15) and, motivated by empirical evidence, assume that the referent is based on expectations. We find that reference dependence on behalf of plaintiffs increases the settlement probability
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The Signaling Role of Charitable Contributions by Businesses: A Tax Policy Perspective Am. Law Econ. Rev. (IF 0.96) Pub Date : 2021-11-13 Tomer Blumkin, Yoram Margalioth, Efraim Sadka, Adi Sharoni
Empirical evidence suggests that charitable contributions to public goods by businesses may be driven not only by the familiar warm glow of giving motive but also as a means for businesses to signal high product quality. Building on this finding, we present an analytical framework that demonstrates that the optimal degree of subsidization should decrease with the extent to which the signal is informative
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The Dynamics of Crime Risk Perceptions Am. Law Econ. Rev. (IF 0.96) Pub Date : 2021-10-26 Martin Salm, Ben Vollaard
We study how residents form beliefs about the prevalence of crime in their neighborhood. We document the process of learning about local crime for a uniquely long period of 10 years after taking up residence. Our analysis is based on four successive waves of a large crime survey in the Netherlands matched with administrative register data for the complete history of places of residence between 1995
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Information and Deterrence in Shareholder Derivative Litigation Am. Law Econ. Rev. (IF 0.96) Pub Date : 2021-10-11 Quinn Curtis
Shareholder derivative litigation is often critiqued as costly to firms Special litigation committees have been devised as a means to dismiss low-value lawsuits and reduce unwanted litigation. This article presents a formal model which operationalizes the most common critiques of shareholder derivative litigation including meritless suits, value-decreasing suits, and self-interested plaintiffs’ attorneys
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Rewards versus Imprisonment Am. Law Econ. Rev. (IF 0.96) Pub Date : 2021-10-08 Murat C Mungan
This article considers the possibility of simultaneously reducing crime, prison sentences, and the tax burden of financing the criminal justice system by introducing rewards, which operate by increasing quality of life outside of prison. Specifically, it proposes a procedure wherein a part of the imprisonment budget is redirected towards financing rewards. The feasibility of this procedure depends
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Strict Liability and Negligence with Search for Precautionary Measures Am. Law Econ. Rev. (IF 0.96) Pub Date : 2021-10-07 Florian Baumann, Tim Friehe
This article explores the performance of strict liability and negligence when agents initially have imperfect information about what care options exist to influence expected accidental harm. A technology that establishes a basic level of care is commonly known in our framework, but whether a superior one exists is uncertain. Injurers and/or victims can engage in a costly search to find out. For this
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Deterrence and the Adjustment of Sentences During Imprisonment Am. Law Econ. Rev. (IF 0.96) Pub Date : 2021-10-04 A Mitchell Polinsky, Steven Shavell
The prison time actually served by a convicted criminal depends to a significant degree on decisions made by the state during the course of imprisonment—notably, on whether to grant parole. We study a model of the adjustment of sentences assuming that the state’s objective is the optimal deterrence of crime. In the model, the state can lower or raise a criminal’s initial sentence on the basis of deterrence-relevant
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Can’t Wait Any Longer? The Effects of Shorter Waiting Periods on Divorce and Remarriage Am. Law Econ. Rev. (IF 0.96) Pub Date : 2021-07-24 Ho-Po Crystal Wong
Since the 1990s, many U.S. states have enacted or lengthened the waiting periods required for parties to divorce with the goal of strengthening marriage or at least discouraging divorce. I use the length of time by which some states have shortened their waiting periods to analyze how such waiting periods affect remarriage rates. I find that when the waiting period is shortened to 1.5 years or less
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The Impact of the Coronavirus Lockdown on Domestic Violence Am. Law Econ. Rev. (IF 0.96) Pub Date : 2021-05-18 Justin McCrary, Sarath Sanga
We use 911 call records and mobile device location data to study the impact of the coronavirus lockdown on domestic violence. The percent of people at home sharply increased at all hours, and nearly doubled during regular working hours, from 45% to 85%. Domestic violence increased 12% on average and 20% during working hours. Using neighborhood-level identifiers, we show that the rate of first-time
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A Model of Stock-Market-Based Rulemaking Am. Law Econ. Rev. (IF 0.96) Pub Date : 2021-05-12 Lee Y.
AbstractWe consider the extent to which a government regulator can harness information about a proposed rule from observing the stock price movements of the affected firms—information the regulator may in turn use to deliberate whether to adopt the rule. The rule comes with an uninformed ex ante (expected) value, which can be positive or negative. We find that if the rule’s ex ante value is positive
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Unrequested Benefits, Damages Assessment, and Information Acquisition Am. Law Econ. Rev. (IF 0.96) Pub Date : 2021-04-07 Zhiyong (John) Liu, Ronen Avraham, Yue Qiao
We investigate the interaction between the law’s prohibition of recovery for unrequested benefits (but provision of damages for unrequested harms) imposed on third parties, and parties’ incentives at the ex ante stage to acquire information about the harms or benefits of the activities they consider engaging in. We analyze the impact of these interactions on the efficiency ranking of two prevalent
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Litigation Spending and Care under the English and American Rules: Experimental Evidence Am. Law Econ. Rev. (IF 0.96) Pub Date : 2021-03-01 Baptiste Massenot, Maria Maraki, Christian Thöni
We investigate the effects of fee-shifting in an experimental litigation game. In our setup, a defendant may cause harm to a plaintiff. The defendant can take precautions to lower the probability of harm at a personal cost. In case of harm, the parties go to court, where the winner is determined by a rent-seeking contest. We compare two fee-shifting rules: under the American rule each party bears its
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Mandatory Retirement and Age, Race, and Gender Diversity of University Faculties Am. Law Econ. Rev. (IF 0.96) Pub Date : 2021-02-10 Daniel E Ho, Oluchi Mbonu, Anne McDonough
While many have documented the changing demographics of universities, understanding the effects of prohibiting mandatory retirement (“uncapping”) has proved challenging. We digitize detailed directories of all American law school faculty from 1971–2017 and show that uncapping in 1994 had dramatic effects. From 1971 to 1993, the percent of faculty above 70—when mandatory retirement would typically have
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The Effect of Fee Shifting on Litigation: Evidence from a Policy Innovation in Intermediate Cost Shifting Am. Law Econ. Rev. (IF 0.96) Pub Date : 2021-02-05 Christian Helmers, Yassine Lefouili, Brian J Love, Luke McDonagh
We study the effect of fee shifting rules on litigation. First, we build a model to study the theoretical effect of a change in cost-recovery rules on case filings, (postfiling) settlement, win rates, and plaintiffs’ average litigation expenditures. We then undertake an empirical analysis of the introduction of an intermediate cost shifting rule that falls between the English and American Rules: a
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The Dark Money Subsidy? Tax Policy and Donations to Section 501(c)(4) Organizations Am. Law Econ. Rev. (IF 0.96) Pub Date : 2020-11-13 Galle B.
AbstractThis article presents the first empirical examination of giving to §501(c)(4) organizations, which have recently become important players in U.S. politics. Unlike gifts to charity, donations to a 501(c)(4) are not legally deductible. Yet, gifts to c(4) organizations are highly elastic to the after-tax price of charitable giving. At the lower end of the observed tax price range, c(4) giving
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The Impact of Legalized Abortion on Crime over the Last Two Decades Am. Law Econ. Rev. (IF 0.96) Pub Date : 2020-11-11 Donohue J, Levitt S.
AbstractDonohue and Levitt (2001) presented evidence that the legalization of abortion in the early 1970s played an important role in the crime drop of the 1990s. That paper concluded with a strong out-of-sample prediction regarding the next two decades: “When a steady state is reached roughly twenty years from now, the impact of abortion will be roughly twice as great as the impact felt so far. Our
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The Effect of Mandatory Insurer Reporting on Settlement Delay Am. Law Econ. Rev. (IF 0.96) Pub Date : 2021-01-07 Heaton P.
AbstractTo improve their fiscal position, Medicare and some state Medicaid programs have recently taken steps to mandate reporting of personal injury awards and thus facilitate subrogation against such awards. Participants in the tort system have argued these additional reporting requirements might delay settlement of claims, harming both plaintiffs and defendants. This article examines this problem
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Filtering Tort Accidents Am. Law Econ. Rev. (IF 0.96) Pub Date : 2020-06-14 De Mot J, Depoorter B, Miceli T.
AbstractConventional wisdom in the economic analysis of tort law holds that legal errors distort incentives, causing behavior to depart from the optimum. If potential injurers know that courts err, they may engage in less or more than optimal precaution. This article revisits the effect of judicial error on the incentives of potential injurers by identifying a heretofore-neglected filtering effect
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Discrimination and Deterrence with Enforcer Liability Am. Law Econ. Rev. (IF 0.96) Pub Date : 2020-06-03 Mungan M.
AbstractTaste-based discrimination (i.e. discrimination due to racist preferences) receives more attention than statistical discrimination in the enforcement literature, because the latter allows enforcers to increase their “success rates.” I show here that when enforcers’ incentives can be altered via liabilities and rewards, all types of discrimination reduce deterrence. Moreover, adverse effects
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Political Ideology and the Law Review Selection Process Am. Law Econ. Rev. (IF 0.96) Pub Date : 2020-05-02 Chilton A, Masur J, Rozema K.
AbstractWe investigate the role that political ideology plays in the selection process for articles in law reviews. To do so, we match data on the political ideology of student editors from 15 top law reviews from 1990 to 2005 to data on the political ideology of the authors of accepted articles. We find that law reviews with a higher share of conservative editors accept a higher share of articles
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The Impact of the Foreign Corrupt Practices Act on Competitiveness, Bribery, and Investment Am. Law Econ. Rev. (IF 0.96) Pub Date : 2020-03-14 Arbatskaya M, Mialon H.
AbstractThe Foreign Corrupt Practices Act (FCPA) prohibits U.S.-related firms from making bribes abroad. We analyze the FCPA’s effects in a model of competition between a U.S. and foreign firm for contracts in a host country. If the FCPA only applies to the U.S. firm, it reduces that firm’s competitiveness and either increases bribery by the foreign firm or reduces overall investment. If the FCPA also
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The Disparate Impact of Up-or-Out Promotion Policy on Fertility Timing Am. Law Econ. Rev. (IF 0.96) Pub Date : 2020-03-11 Park K, Rim N.
AbstractThere is growing evidence that childbirth can have especially adverse effects on the career advancement of women. Our study examines how this affects the fertility decisions of men and women on the partner track. We use the After the JD study, a rich panel data set on a nationally representative sample of lawyers, and find that women are more likely than men to delay their first child until
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The Ex-Middle Problem for Law-and-Economics Am. Law Econ. Rev. (IF 0.96) Pub Date : 2020-03-04 Levmore S.
AbstractLaw-and-economics has an ex-middle problem. First, there is the problem of preserving law’s deterrent power, and its ability to influence later behavior, even when it is sensible to renegotiate incentives later on. The issue is hardly limited to contract renegotiation, and the ubiquity of this kind of ex-middle thinking is examined here. Second, there is the idea that the more our thinking
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Fiscal Incentives in Law Enforcement Am. Law Econ. Rev. (IF 0.96) Pub Date : 2020-03-04 Harvey A.
AbstractIn recent years, numerous observers have raised concerns about “policing for profit,” or the deployment of law enforcement resources to raise revenue rather than to provide public safety. However, identifying the causal effects of fiscal incentives on law enforcement behavior has remained elusive. In a regression discontinuity design implemented on traffic citation and accident data from Saskatchewan
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Liability for Third-Party Harm When Harm-Inflicting Consumers Are Present Biased Am. Law Econ. Rev. (IF 0.96) Pub Date : 2020-02-04 Friehe T, Rößler C, Dong X.
AbstractThis article analyzes the workings of liability when harm-inflicting consumers are present biased and both product safety and consumer care influence expected harm. We show that present bias introduces a rationale for shifting some losses onto the manufacturer, in stark contrast with the baseline scenario in which strict consumer liability induces socially optimal product safety and precaution
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The Immediate Consequences of Federal Pretrial Detention Am. Law Econ. Rev. (IF 0.96) Pub Date : 2020-01-17 Didwania S.
AbstractUnlike the cash-bail regimes that are prevalent in state courts, federal courts rarely use money bail as a condition of pretrial release. Nonetheless, this article presents evidence that pretrial release influences case outcomes for federal defendants. Using case data spanning 71 federal district courts, the article suggests that pretrial release reduces a defendant’s sentence and increases
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Who Files for Bankruptcy? The Heterogeneous Impact of State Laws on a Household’s Bankruptcy Decision Am. Law Econ. Rev. (IF 0.96) Pub Date : 2019-01-01 Michelle M Miller
Abstract This article examines the heterogeneous impact of state exemption laws and state garnishment laws on bankruptcy. Using a new household-level dataset, my empirical specification simultaneously examines the impact these laws have on a household’s bankruptcy decision as well as a household’s assets and unsecured debts. I find that high exemption laws have a positive impact on bankruptcy and that
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A Theoretical Framework for Law and Macroeconomics Am. Law Econ. Rev. (IF 0.96) Pub Date : 2019-01-01 Yair Listokin
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Bias-Corrected Estimation of Price Impact in Securities Litigation Am. Law Econ. Rev. (IF 0.96) Pub Date : 2019-01-01 Taylor Dove,Davidson Heath,J B Heaton
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Asymmetric Effects on Fatality Rates of Changes in Workers’ Compensation Laws Am. Law Econ. Rev. (IF 0.96) Pub Date : 2019-01-01 Elissa Philip Gentry, W Kip Viscusi
With irreversible investments in safety, changes in workers’ compensation laws should affect employer incentives asymmetrically: increases in workers’ compensation generosity should cause employers to invest more in safety, but comparable decreases might not cause them to disinvest in existing precautionary programs or equipment. Although maximum weekly benefits caps have been fairly stable, state
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Informational Negligence Law Am. Law Econ. Rev. (IF 0.96) Pub Date : 2019-01-01 Alon Cohen, Avraham Tabbach
This article offers an analysis of negligence law in an environment with asymmetric information and costly signaling. We consider three possible variations of the negligence doctrine, based on its two elements—the standard of care and damages. We find that accounting for signaling costs affects the social desirability of the negligence rule. In a nontrivial number of cases, the social costs are lowest
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The Complementary Role of Liability and Safety Regulation Am. Law Econ. Rev. (IF 0.96) Pub Date : 2019-01-01 Massimo D’Antoni, Avraham D Tabbach
This article deals with the control of hazardous activities in situations where potential victims can affect their exposure to risk. Economists have generally considered ex ante regulation (safety standards) to be a substitute for ex post policies (exposure to tort liability) in order to control externalities. We show that when the victim’s compensation is partial (e.g., due to death or serious bodily
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Explaining Difference in the Quantity of Cases Heard by Courts of Last Resort Am. Law Econ. Rev. (IF 0.96) Pub Date : 2019-01-01 Bravo-Hurtado Pablo, Álvaro Bustos
While civil law courts of last resort—e.g., cassation courts in France, Italy, and Chile—review up to 90% of appealed cases, common law courts of last resort—e.g., supreme courts of the United States, United Kingdom, and Canada—hear as few as 1% of the same petitions. In this study, we postulate that these different policies can be explained by a comparatively larger commitment from common law courts
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Far from Home and All Alone: The Impact of Prison Visitation on Recidivism Am. Law Econ. Rev. (IF 0.96) Pub Date : 2019-01-01 Logan M Lee
Tightening corrections budgets, the lack of a legal right to in-person prison visitation, and the increasing availability of video visitation have led many prison and jail administrators to consider limiting opportunities for in-person visitation. This is concerning given the large literature which argues inmates receiving in-person visits are less likely to recidivate upon release. On the other hand
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Legal Change in the Face of Risk-Averse Subjects: A Generalization of the Theory Am. Law Econ. Rev. (IF 0.96) Pub Date : 2019-01-01 Luigi Alberto Franzoni
This study investigates the optimal nature of law making under uncertainty. I focus on a case in which a harmful activity will be subjected to some regulatory measures (a standard, exposure to liability, or a corrective tax). The bene fits and costs of precaution are ex-ante uncertain, and this places a risk burden on both injurers and victims. The optimal policy should, at the same time, strike a
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Who Cares About Patents? Cross-Industry Differences in the Marginal Value of Patent Term Am. Law Econ. Rev. (IF 0.96) Pub Date : 2019-01-01 Neel U Sukhatme, Judd N L Cramer
How much do market participants in different industries value a marginal change in patent term (i.e., duration of patent protection)? We explore this research question by measuring the behavioral response of patentees to a rare natural experiment: a change in patent term rules, due to passage of the TRIPS agreement. We find significant heterogeneity in patentee behavior across industries, some of which
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Retaliation, Remedies, and Contracts Am. Law Econ. Rev. (IF 0.96) Pub Date : 2019-01-01 Sergio Mittlaender, Vincent Buskens
Contracts commit individuals to a future course of action and create feelings of entitlement on the parties. In a contractual gap, parties’ duties and rights are not univocal, and while promisors will often feel entitled to breach, promisees will feel entitled to receive the promised performance. This divergence leads to disputes, aggrievement, and retaliatory behavior whenever one of the parties feels
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Hide or Show? Observability of Private Precautions Against Crime When Property Value is Private Information Am. Law Econ. Rev. (IF 0.96) Pub Date : 2018-11-29 Florian Baumann, Philipp Denter, Tim Friehe
This paper analyzes a contest in which defenders move first, have private information about the value of the objects they are trying to protect, and determine the observability of their defense efforts. The equilibrium consistent with the intuitive criterion depends on the distribution of defender types, the magnitude of the difference between defender types, and the asymmetry between defender and
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Safety in Police Numbers: Evidence of Police Effectiveness from Federal COPS Grant Applications Am. Law Econ. Rev. (IF 0.96) Pub Date : 2018-11-27 Emily K Weisburst
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Statistical (and Racial) Discrimination, “Ban the Box”, and Crime Rates Am. Law Econ. Rev. (IF 0.96) Pub Date : 2018-10-08 Murat C Mungan
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Litigation and Selection with Correlated Two-Sided Incomplete Information Am. Law Econ. Rev. (IF 0.96) Pub Date : 2018-10-01 Daniel Klerman, Yoon-Ho Alex Lee, Lawrence Liu
This article explores the selection of disputes for litigation in a setting with two-sided incomplete information and correlated signals. The models analyzed here suggest that Priest and Klein’s conclusion that close cases are more likely to go to trial than extreme cases remains largely valid when their model is interpreted as involving correlated, two-sided incomplete information and is updated (i)
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Does Legal Status Matter for Educational Choices? Evidence from Immigrant Teenagers Am. Law Econ. Rev. (IF 0.96) Pub Date : 2018-09-21 Zachary Liscow, William Gui Woolston
Of the estimated 11.1 million undocumented immigrants in the United States, 1.1 million are children. Due to differential treatment in the labor market, teenage undocumented immigrants face low returns to schooling. To measure the effect of legal status on the educational choices of Hispanic teenagers, we compare siblings who differ in their legal status due to their birth country. We find that teenagers