New Economics Papers
on Law and Economics
Issue of 2014‒06‒07
six papers chosen by
Eve-Angeline Lambert, Université de Lorraine

  1. Norm Enforcement in Social Dilemmas. An Experiment with Police Commissioners By David Dickinson; David Masclet; Marie Claire Villeval
  2. Remittances and the Impact on Crime in Mexico By Steve Brito; Ana Corbacho; Rene Osorio Rivas
  3. Hospital Mergers with Regulated Prices By Kurt R. Brekke; Luigi Siciliani; Odd Rune Straume
  4. The Length of Maternity Leave and Family Health By Beuchert, Louise Voldby; Humlum, Maria Knoth; Vejlin, Rune Majlund
  5. When do the Expectations of Others Matter? An Experiment on Distributional Justice and Guilt Aversion By Riccardo Ghidoni; Matteo Ploner
  6. The Separation of Information and Lending and the Rise of Rating Agencies in the United States By Marc Flandreau; Gabriel Geisler Mesevage

  1. By: David Dickinson (Department of Economics - Appalachian State University); David Masclet (CREM - Centre de Recherche en Economie et Management - CNRS : UMR6211 - Université de Rennes 1 - Université de Caen Basse-Normandie); Marie Claire Villeval (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - École Normale Supérieure (ENS) - Lyon - PRES Université de Lyon - Université Jean Monnet - Saint-Etienne - Université Claude Bernard - Lyon I (UCBL))
    Abstract: Do individuals trained in law enforcement punish or reward differently from typical student subjects ? We analyze norm enforcement behavior of newly appointed police commissioners in both a Voluntary Contribution Mechanism game and a Common Pool Resource game. Our experimental design includes treatments where a reward or sanction institution is exogenously imposed, as well as treatments with endogenous selection of the norm enforcement institution. Compared to a standard student-subject pool, police commissioners cooperate significantly more in both games. With exogenous institutions, police commissioners bear a higher burden of punishment costs than non-police subjects. When the norm enforcement institution is endogenous, all subjects vote more in favor of rewards over sanctions, but police subjects with some work experience are more likely to vote for sanctions. Police subjects also reward and sanction more than the others when the institution results from a majority vote.
    Keywords: Norm enforcement; Common Pool Resources; Voluntary Contribution Mechanism; Police officers; Experiment
    Date: 2014
  2. By: Steve Brito; Ana Corbacho; Rene Osorio Rivas
    Abstract: This working paper studies the effect of remittances from the United States on crime rates in Mexico. The topic is examined using municipal-level data on the percent of household receiving remittances and homicides per 100,000 inhabitants. Remittances are found to be associated with a decrease in homicide rates. Every 1 percent increase in the number of households receiving remittances reduces the homicide rate by 0.05 percent. Other types of crimes are analyzed, revealing a reduction in street robbery of 0.19 percent for every 1 percent increase in households receiving remittances. This decrease is also observed using a state-level panel in another specification. The mechanisms of transmission could be related to an income effect or an incapacitation effect of remittances increasing education, opening job opportunities, and/or reducing the amount of time available to engage in criminal activities.
    Keywords: Remittances, Crime, Remittances, Migration, Crime, Homicides, Mexico
    Date: 2014–05
  3. By: Kurt R. Brekke (Department of Economics, Norwegian School of Economics); Luigi Siciliani (Department of Economics and Related Studies; and Centre for Health Economics, University of York); Odd Rune Straume (Universidade do Minho - NIPE)
    Abstract: We study the effects of a hospital merger using a spatial competition framework with semialtruistic hospitals that invest in quality and expend cost-containment effort facing regulated prices. We find that the merging hospitals always reduce quality, whereas non-merging hospitals respond by increasing (reducing) quality if qualities are strategic substitutes (complements). A merger leads to higher average treatment cost efficiency and, if qualities are strategic substitutes, might also increase average quality in the market. If a merger leads to hospital closure, the resulting effect on quality is positive (negative) for all hospitals in the market if qualities are strategic substitutes (complements). Whether qualities are strategic substitutes or complements depends on the degree of altruism, the effectiveness of cost-containment effort, and the degree of cost substitutability between quality and treatment volume.
    Keywords: Hospital mergers; Quality competition; Cost efficiency; Antitrust
    JEL: I11 I18 L13 L44
    Date: 2014
  4. By: Beuchert, Louise Voldby (Aarhus University); Humlum, Maria Knoth (Aarhus University); Vejlin, Rune Majlund (Aarhus University)
    Abstract: We study the relationship between the length of maternity leave and the physical and psychological health of the family. Using a reform of the parental leave scheme in Denmark that increased the number of weeks of leave with full benefit compensation, we estimate the effect of the length of maternity leave on a range of health indicators including the number of hospital admissions for both mother and child and the probability of the mother receiving antidepressants. The reform led to an increase in average post-birth maternity leave of 32 days. We find limited evidence that the increase in the length of maternity leave matters for child or maternal health outcomes and thus we complement the existing evidence on maternity leave expansions that tends to find limited effects on children's later developmental, educational, and labor market outcomes. Our results suggest that any beneficial effects of increasing the length of maternity leave are greater for low-resource families.
    Keywords: maternity leave, family health, regression-discontinuity
    JEL: I18 J13 J18
    Date: 2014–05
  5. By: Riccardo Ghidoni; Matteo Ploner
    Abstract: In a modified dictator game experiment, we study how distributional justice, measured by the proportionality between effort exerted and rewards obtained, and guilt feelings triggered by others’ expectations affect dictator’s choices. We consider these two sources of behavior in isolation and in interaction. Our results suggest that both justice concerns and guilt aversion are important drivers of behavior. However, the expectations of others are more relevant when the choice environment is likely to induce less equitable outcomes.
    Keywords: Justice, Guilt Aversion, Entitlement Rights, Experiments
    Date: 2014
  6. By: Marc Flandreau; Gabriel Geisler Mesevage (IHEID, The Graduate Institute of International and Development Studies, Geneva)
    Abstract: This paper provides a new interpretation of the early rise of rating agencies in the United States (initially known as ‘Mercantile Agencies’). We explain this American exceptionality through an inductive approach that revisits the conventional parallel with the UK. In contrast with earlier narratives that have emphasized the role of Common Law and the greater understanding of American judges that would have supported the rise of an ethos of ‘transparency’, we argue that Mercantile Agencies prospered as a remedy to deficient bankruptcy law and weak protection of creditor rights in the US. The result was to raise the value of the nation-wide registry of defaulters which the Mercantile Agencies managed. This ensured the Agencies’ profitability and endowed them with resources to buy their survival in a legal environment that remained stubbornly hostile.
    Keywords: Rating, Mercantile Agencies, Information, Credit Insurance, Comparative Economic History, Libel, Business Law
    JEL: P5 G2 N2 K2
    Date: 2014–05–27

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