New Economics Papers
on Law and Economics
Issue of 2010‒06‒26
three papers chosen by
Jeong-Joon Lee, Towson University

  1. At the Mercy of the Prisoner Next Door. Using an Experimental Measure of Selfishness as a Criminological Tool By Thorsten Chmura; Christoph Engel; Markus Englerth; Thomas Pitz
  2. An Experimental Contribution to the Theory of Customary (International) Law By Christoph Engel
  3. The Brazilian Payroll Lending Experiment By Christiano Arrigoni Coelho; Bruno Funchal; João Manoel Pinho de Mello

  1. By: Thorsten Chmura (University of Bonn); Christoph Engel (Max Planck Institute for Research on Collective Goods, Bonn); Markus Englerth (Max Planck Institute for Research on Collective Goods, Bonn); Thomas Pitz (Max Planck Institute for Research on Collective Goods, Bonn)
    Abstract: Do criminals maximise money? Are criminals more or less selfish than the average subject? Can prisons apply measures that reduce the degree of selfishness of their inmates? Using a tried and tested tool from experimental economics, we cast new light on these old criminological questions. In a standard dictator game, prisoners give a substantial amount, which calls for more refined versions of utility in rational choice theories of crime. Prisoners do not give less than average subjects, not even than subjects from other closely knit communities. This speaks against the idea that people commit crimes because they are excessively selfish. Finally those who receive better marks at prison school give more, as do those who improve their marks over time. This suggests that this correctional intervention also reduces selfishness.
    Keywords: experiment, Crime, Prison, Dictator Game, Hurdle Model
    JEL: K42 C91 K14 C34
    Date: 2010–06
  2. By: Christoph Engel (Max Planck Institute for Research on Collective Goods, Bonn)
    Abstract: In their majority, public international lawyers postulate that for a new rule of customary law to originate, two conditions must be fulfilled: there must be consistent practice, and it must be shown that this practice is motivated by the belief that such behaviour is required in law. Maurice Mendelson (Recueil des Cours 272 (1998) 155) has challenged this view. He believes that the majority view ignores the fundamentally incomplete nature of public international law. He claims that the new rule emerges because mere practice leads to convergent expectations. This paper uses data from student experiments with a linear public good to show that behaviour con-verges even absent verbal communication; that convergence is guided by mean contributions in the previous round, which serve as an implicit norm; that freeriding on this implicit norm is re-garded as illegitimate; that cooperation can be stabilised at a high level if “reprisals” are permitted. Hence the mechanism of norm formation proposed by Maurice Mendelson is fully borne out by the experimental data.
    Keywords: experiment, customary international law, opinio iuris, linear public good
    JEL: H41 K33 D23 C91 F53
    Date: 2010–04
  3. By: Christiano Arrigoni Coelho (Banco Central do Brasil e Department of Economics PUC-Rio); Bruno Funchal (FUCAPE Business School); João Manoel Pinho de Mello (Department of Economics PUC-Rio)
    Abstract: In 2004, Brazil provided an interesting natural experiment concerning personal credit. A new law was enacted allowing banks to offer loans with repayment through automatic payroll or social security benefit deduction, thus removing a significant part of the moral hazard problem by eliminating the choice of default when debtors are able to pay their loans out of their wages. We estimate the impact of the new law using car loans as a control group. We find that, at the industry level, the new law has caused a reduction in interest rates and an increase in the volume of personal credit.
    Keywords: Credit markets, collateral, difference-in-differences. JEL Code: G21; D01; C33; K00; E44.
    Date: 2010–04

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