New Economics Papers
on Law and Economics
Issue of 2008‒12‒01
six papers chosen by
Jeong-Joon Lee, Towson University

  1. Contracts and Promises - An Approach to Pre-play Agreements By Topi Miettinen
  2. "Might Not Be a Tomorrow": A Multi-Methods Approach to Anticipated Early Death and Youth Crime By Brezina, Timothy; Tekin, Erdal; Topalli, Volkan
  3. Is corruption an efficient grease? By Méon, Pierre-Guillaume; Weill, Laurent
  4. Expanding the Focus of Cost-Benefit Analysis for Food Safety: A Multi-Factorial Risk Prioritization Approach By Caswell, Julie A.
  5. Asymmetric Equilibria and Non-Cooperative Access Pricing in Telecommunications By Behringer, Stefan
  6. Self-Esteem, Moral Capital, and Wrongdoing By Ernesto Dal Bó; Marko Terviö

  1. By: Topi Miettinen (SITE, Stockholm School of Economics, and Max Planck Institute for Ecopnomics, Jena, Germany)
    Abstract: In line with the widely applied principle of just deserts, we assume that the severity of the penalty on a contract offender increases in the harm on the other. When this principle holds, the influence of the efficiency of the agreement on the incentives to abide by it crucially depends on whether actions are strategic complements or substitutes. With strategic substitutes, there is a conflict between Pareto-efficiency and the incentives to abide. The opposite tends to be true when actions are strategic complements. The results are interpreted in the context of legal contracts and in that of informal mutual promises.
    Keywords: partnerships, contracts, pre-play communication, legal enforcement, social norms, guilt
    JEL: C72 C78 K12 Z13
    Date: 2008–11–20
  2. By: Brezina, Timothy (Georgia State University); Tekin, Erdal (Georgia State University); Topalli, Volkan (Georgia State University)
    Abstract: A number of researchers point to the anticipation of early death, or a sense of "futurelessness," as a contributing factor to youth crime and violence. Young people who perceive a high probability of early death, it is argued, may have little reason to delay gratification for the promise of future benefits, as the future itself is discounted. Consequently, these young people tend to pursue high-risk behaviors associated with immediate rewards, including crime and violence. Although existing studies lend empirical support to these arguments and show a statistical relationship between anticipated early death and youth crime, this support remains tentative. Moreover, a number of questions remain regarding the interpretation of this relationship, the meanings that offenders attach to the prospect of early death, and the causal mechanisms that link anticipated early death to youth crime. In this paper, we address the limitations of previous studies using a multi-methods approach, involving the analyses of national survey data and in-depth interviews with active street offenders.
    Keywords: crime, youth
    JEL: K0 K42
    Date: 2008–11
  3. By: Méon, Pierre-Guillaume (BOFIT); Weill, Laurent (BOFIT)
    Abstract: This paper tests whether corruption may act as an efficient grease for the wheels of an oth-erwise deficient institutional framework. We analyze the interaction between aggregate efficiency, corruption, and other dimensions of governance for a panel of 54 developed and developing countries. Using three measures of corruption and five measures of other aspects of governance, we observe that corruption is consistently detrimental in countries where institutions are effective, but that it may be positively associated with efficiency in countries where institutions are ineffective. We thus find evidence of the grease the wheels hypothesis.
    Keywords: governance; corruption; income; aggregate productivity; efficiency
    JEL: C33 K40 O43 O47
    Date: 2008–11–21
  4. By: Caswell, Julie A.
    Abstract: A pressing need in the area of food safety is a tool for making overall, macro judgments about which risks should be given priority for management. Governments often seek to base this prioritization on public health impacts only to find that other considerations also influence the prioritization process. A multi-factorial approach formally recognizes that public health, market-level impacts, consumer risk preferences and acceptance, and the social sensitivity of particular risks all play a role in prioritization. It also provides decision makers with a variety of information outputs that allow risk prioritization to be considered along different dimensions. Macro-level prioritization of risks based on multiple factors is an important expanded use of cost-benefit analysis to manage risk.
    Keywords: cost-benefit analysis, food safety, risk prioritization, Agricultural and Food Policy, Food Consumption/Nutrition/Food Safety, Risk and Uncertainty, I18, L51, Q18, K32, H11,
    Date: 2008–07
  5. By: Behringer, Stefan
    Abstract: This paper looks at competition in the Telecommunications industry with non-linear tariffs and network based price discrimination. Allowing for asymmetric networks and non-cooperatively chosen access prices simultaneously allows to explicitly derive non-reciprocal equilibrium access price choices that are above the efficient level.
    Keywords: Asymmetric Networks; Access Pricing; Interconnection; Competition Policy; Telecommunications.
    JEL: L96 L51 L41 K21 D40
    Date: 2008–11–27
  6. By: Ernesto Dal Bó; Marko Terviö
    Abstract: In order to help understand adherence to moral principles and the force of intrinsic motivation, we present an infinite-horizon model where an individual receives random temptations (such as bribe offers) and must decide which to resist. Individual actions depend both on conscious intent and a type reflecting unconscious drives. Temptations yield consumption value, but keeping a good self-image (a high belief of being the type of person that resists) yields self-esteem. We identify conditions for individuals to build an introspective reputation for goodness ("moral capital") and for good actions to lead to a stronger disposition to do good. Bad actions destroy moral capital and lock-in further wrongdoing. Economic shocks that result in higher temptations have persistent effects on wrongdoing that fade only as new generations replace the shocked cohorts. Societies with the same moral fundamentals may display different wrongdoing rates depending on how much past luck has polarized the distribution of individual beliefs. The model illustrates how optimal deterrence may change under endogenous moral costs and how wrongdoing may be compounded as high temptation activities attract individuals with low moral capital.
    JEL: D83 K4 Z1
    Date: 2008–11

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