nep-law New Economics Papers
on Law and Economics
Issue of 2017‒02‒26
eight papers chosen by
Eve-Angeline Lambert, Université de Lorraine

  1. The effect of Western TV on crime: Evidence from East Germany By Tim Friehe; Helge Muller; Florian Neumeier
  2. Judicial Behavior and Devolution at the Privy Council By Sofia Amaral-Garcia; Nuno Garoupa
  3. With a Little Help from My Friends: The Effects of Naloxone Access and Good Samaritan Laws on Opioid-Related Deaths By Daniel I. Rees; Joseph J. Sabia; Laura M. Argys; Joshua Latshaw; Dhaval Dave
  4. Human Decisions and Machine Predictions By Jon Kleinberg; Himabindu Lakkaraju; Jure Leskovec; Jens Ludwig; Sendhil Mullainathan
  5. Do jurors and professional judges differ in their treatment of crime?: Evidence from French reform By Philippe, Arnaud
  6. Optimal Incentives for Patent Challenges in the Pharmaceutical Industry By Böhme, Enrico; Frank, Severin; Kerber, Wolfgang
  7. Camouflage and Ballooning in Health Insurance: Evidence from Abortion By Neumann, Julia Kathleen; Zweifel, Peter; Hofmann, Annette
  8. Do Individuals Put Effort into Lying? Evidence From a Compliance Experiment By Lohse, Tim; Dwenger, Nadja

  1. By: Tim Friehe (University of Marburg); Helge Muller (University of Marburg); Florian Neumeier (CESifo)
    Abstract: This paper explores the causal infl uence of Western television programming on crime rates. We exploit a natural experiment involving access to West German TV within the German Democratic Republic (GDR) in which only geography and topography determined the allocation of individuals to treatment and control groups. Focusing on violent and property crime (as these domains were most likely to be affected by the marked differences in TV content), we find that in the post-reunification decade in which TV content was harmonized, regions that had access to Western TV broadcasts prior to the reunification experienced lower rates of violent crime, sex crime, and theft, but more fraud.
    Keywords: Crime; Television; Media; Natural experiment; Germany.
    JEL: J22 K42 P37 P39
    Date: 2017
  2. By: Sofia Amaral-Garcia; Nuno Garoupa
    Abstract: In this article, we study judicial behavior at the Judicial Committee of the Privy Council (JCPC). British judges in general, and British high court judges in particular, are perceived to be independent and isolated from political pressure and interference. Furthermore, these judges tend to show a particularly high rate of consensus. This has led many scholars to consider that, contrarily to what holds for several other courts around the world (such as the US Supreme Court), the attitudinal model does not find support when British higher court judges are considered. In this paper we assess whether similar conclusions might be drawn from the JCPC, another British court of last resort. We create a unique dataset to study empirically decisions of the JCPC and investigate the extent to which judges exhibit different judicial behavior depending on the type of appeal being brought to the court, i.e., Commonwealth, devolution and domestic appeals. Our results indicate a higher polarization of judicial behavior in the context of devolution appeals (as measured by separate opinions). We discuss these results in the context of the comparative judicial behavior literature and the role of courts in the common law world (with particular reference to human rights).
    Keywords: Judicial Committee of the Privy Council, British higher court judges, judicial behavior, devolution cases, Commonwealth cases, separate opinions, human rights
    JEL: K0
    Date: 2017
  3. By: Daniel I. Rees; Joseph J. Sabia; Laura M. Argys; Joshua Latshaw; Dhaval Dave
    Abstract: In an effort to address the opioid epidemic, a majority of states have recently passed some version of a Naloxone Access Law (NAL) and/or a Good Samaritan Law (GSL). NALs allow lay persons to administer naloxone, which temporarily counteracts the effects of an opioid overdose; GSLs provide immunity from prosecution for drug possession to anyone who seeks medical assistance in the event of a drug overdose. This study is the first to examine the effect of these laws on opioid-related deaths. Using data from the National Vital Statistics System multiple cause-of-death mortality files for the period 1999-2014, we find that the adoption of a NAL is associated with a 9 to 11 percent reduction in opioid-related deaths. The estimated effect of GLSs on opioid-related deaths is of comparable magnitude, but not statistically significant at conventional levels. Finally, we find that neither NALs nor GSLs increase the recreational use of prescription painkillers.
    JEL: H0 I1 K0
    Date: 2017–02
  4. By: Jon Kleinberg; Himabindu Lakkaraju; Jure Leskovec; Jens Ludwig; Sendhil Mullainathan
    Abstract: We examine how machine learning can be used to improve and understand human decision-making. In particular, we focus on a decision that has important policy consequences. Millions of times each year, judges must decide where defendants will await trial—at home or in jail. By law, this decision hinges on the judge’s prediction of what the defendant would do if released. This is a promising machine learning application because it is a concrete prediction task for which there is a large volume of data available. Yet comparing the algorithm to the judge proves complicated. First, the data are themselves generated by prior judge decisions. We only observe crime outcomes for released defendants, not for those judges detained. This makes it hard to evaluate counterfactual decision rules based on algorithmic predictions. Second, judges may have a broader set of preferences than the single variable that the algorithm focuses on; for instance, judges may care about racial inequities or about specific crimes (such as violent crimes) rather than just overall crime risk. We deal with these problems using different econometric strategies, such as quasi-random assignment of cases to judges. Even accounting for these concerns, our results suggest potentially large welfare gains: a policy simulation shows crime can be reduced by up to 24.8% with no change in jailing rates, or jail populations can be reduced by 42.0% with no increase in crime rates. Moreover, we see reductions in all categories of crime, including violent ones. Importantly, such gains can be had while also significantly reducing the percentage of African-Americans and Hispanics in jail. We find similar results in a national dataset as well. In addition, by focusing the algorithm on predicting judges’ decisions, rather than defendant behavior, we gain some insight into decision-making: a key problem appears to be that judges to respond to ‘noise’ as if it were signal. These results suggest that while machine learning can be valuable, realizing this value requires integrating these tools into an economic framework: being clear about the link between predictions and decisions; specifying the scope of payoff functions; and constructing unbiased decision counterfactuals.
    JEL: C01 C54 C55 D8 H0 K0
    Date: 2017–02
  5. By: Philippe, Arnaud
    Abstract: Do citizens and professional judges agree on the accuracy of sentences? While surveys regularly point out a demand by citizens for harsher punishment, the differences between surveys’ and real decisions’ conditions are large enough to cast a doubt on the results. The introduction of two jurors into a court composed of three professional judges in two French regions and for a subsample of crimes in 2012 offers a good natural experiment for documenting the question of the differences between professional judges and citizens. Difference-in-differences or tripledifference methods do not permit me to identify any change in the probability of being convicted or in sentences given by a court including jurors. If some characteristics of the reform could partly explain those null results, they clearly go against the hypothesis of a major disagreement between professional judges and citizens when they have to make real decisions in criminal cases.
    Keywords: courts, sentencing, crime, judicial decision, jury members
    JEL: D83 K14 K4
    Date: 2017–02
  6. By: Böhme, Enrico; Frank, Severin; Kerber, Wolfgang
    Abstract: Patent settlements in the pharmaceutical industry between originator and generic firms have been scrutinized critically by competition authorities for delaying the market entry of generics and being therefore potentially anticompetitive. In this paper we present a model that analyzes the tradeoff between limiting the delaying of generic entry through patent settlements and giving generic firms more incentives for challenging weak patents of the originator firms. We can show that under general assumptions allowing patent settlements with a later market entry of generics than the expected market entry under patent litigation would increase consumer welfare. We introduce a policy parameter for determining the optimal additional period for collusion that would maximize consumer welfare and show that the size of this policy parameter depends on the size of the challenging costs, the intensity of competition, and the duration between the market entries of the first and second generic.
    JEL: L10 L40 O34
    Date: 2016
  7. By: Neumann, Julia Kathleen; Zweifel, Peter; Hofmann, Annette
    Abstract: This paper provides a microeconomic basis for simultaneously explaining two phenomena related to health insurance: camouflage and ballooning. We use abortions in Switzerland as an illustrative example. First, a significant share of abortions is camouflaged by contrived medical coding, and second, there is evidence of ballooning in that jurisdictions with strict enforcement of abortion regulation tend to export the problem to more liberal ones. The analysis differs from the existing literature in that we explicitly model the search effort of an individual seeking a health service, i.e., an abortion or camouflage. Using data provided by a major social health insurer, theoretical predictions are confirmed to a considerable degree. In particular, women who derive a particularly high benefit from an abortion (and even more so, from its camouflage) are less discouraged by strict enforcement than others.
    JEL: I18 J13 K42
    Date: 2016
  8. By: Lohse, Tim; Dwenger, Nadja
    Abstract: We study whether individuals in a face-to-face situation can successfully exert some lying effort to delude others. We exploit data from a laboratory experiment in which participants were asked to assess videotaped statements as being rather truthful or untruthful. The statements are face-to-face tax declarations which were recorded in an incentivised tax compliance experiment. The video clips to be assessed feature each subject twice making the same declaration. But one time the subject is reporting truthfully, the other time willingly untruthfully. This allows us to investigate within-subject differences in trustworthiness. Drawing on more than 18,000 assessments, we find that a subject is perceived as more trustworthy if she deceives than if she reports truthfully. It is particularily individuals with dishonest appearance who manage to increase their perceived trustworthiness by up to 15 percent. This is evidence of individuals successfully exerting lying effort.
    JEL: C91 H31 K42
    Date: 2016

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