nep-law New Economics Papers
on Law and Economics
Issue of 2017‒06‒18
five papers chosen by
Eve-Angeline Lambert, Université de Lorraine

  1. Preordered Service in Contract Enforcement By Jan U. Auerbach; Miguel A. Fonseca
  2. The Digital Privacy Paradox: Small Money, Small Costs, Small Talk By Susan Athey; Christian Catalini; Catherine Tucker
  3. Personal Bankruptcy Law and Entrepreneurship By Geraldo Cerqueiro; María Fabiana Penas; Robert Seamans
  4. The Effect of Information Salience on Product Quality: Louisville Restaurant Hygiene and By Makofske, Matthew
  5. Does Bible and Quran Represent the True Word of God, The Economist case against Addictive substances By Hayat, Azmat

  1. By: Jan U. Auerbach (Department of Economics, University of Exeter); Miguel A. Fonseca (Department of Economics, University of Exeter)
    Abstract: We propose a procedural rule that we refer to as preordered service to replace sequential service of civil cases for breach of contract. The judiciary preannounces a list that ranks all entities that may enter contracts by some uniquely identifying information, such as taxpayer numbers. Courts use this list to enforce the contracts of the highest ranked entities that file a contract case. In theory, unlike sequential service, preordered service ensures efficiency in a population of investment games. Results from a laboratory experiment suggest that it may substantially reduce the caseload at courts and mitigate payoff inequality.
    Keywords: Judicial system, courts, judiciary performance, legal procedure, civil cases, caseload, contract enforcement, population of investment games, experiments.
    JEL: K00 K12 K40 O17 C92
    Date: 2017
  2. By: Susan Athey; Christian Catalini; Catherine Tucker
    Abstract: 'Notice and Choice' has been a mainstay of policies designed to safeguard consumer privacy. This paper investigates distortions in consumer behavior when faced with notice and choice which may limit the ability of consumers to safeguard their privacy using field experiment data from the MIT digital currency experiment. There are three findings. First, the effect small incentives have on disclosure may explain the privacy paradox: Whereas people say they care about privacy, they are willing to relinquish private data quite easily when incentivized to do so. Second, small navigation costs have a tangible effect on how privacy-protective consumers' choices are, often in sharp contrast with individual stated preferences about privacy. Third, the introduction of irrelevant, but reassuring information about privacy protection makes consumers less likely to avoid surveillance, regardless of their stated preferences towards privacy.
    JEL: C93 D62 D8 K10 O3 O31 O38
    Date: 2017–06
  3. By: Geraldo Cerqueiro; María Fabiana Penas; Robert Seamans
    Abstract: We study the effect of debtor protection on firm entry and exit dynamics. We find that more lenient personal bankruptcy laws lead to higher firm entry, especially in sectors with low entry barriers. We also find that debtor protection increases firm exit rates and that this effect is independent of firm age. Our results overall indicate that the wealth insurance provided by personal bankruptcy exemptions induce individuals to embrace entrepreneurship and that this in turn fosters competition in a Schumpeterian sense.
    Keywords: Debtor Protection, Personal Bankruptcy, Entrepreneurship.
    Date: 2017–01
  4. By: Makofske, Matthew
    Abstract: In late June 2013, the city of Louisville, Kentucky, announced plans to provide restaurant health inspection data to for publication on their popular online consumer-review forum. These data were already publicly available on the city's website. I utilize this partnership to test whether an increase in the salience of disclosed quality information on a particular product attribute, induces sellers to improve product quality along that dimension. Consumers use Yelp to gather information on many characteristics of a restaurant's product. Consumers depend less on Yelp to learn about chain-affiliated restaurants, because much of this information is conveyed through the chain's reputation. Using data from over 11,000 Louisville restaurant health inspections, I compare health inspection performance for independent and chain-affiliated restaurants, before and after the announcement of the partnership. Controlling for a variety of factors, I estimate that this increased salience caused substantial improvement in independent restaurant hygiene. The average treatment effect is estimated to be a 12-14% decrease in health score point deductions, and a 29-37% decrease in critical violations (those deemed to be the greatest public health risk), per inspection. The effect of the Louisville-Yelp partnership on health score point deductions is entirely evident in restaurants' first inspections following its announcement, where the estimated effect is a 14-16% relative decrease.
    Keywords: cost of information acquisition, salience, mandatory disclosure, product quality, restaurant hygiene
    JEL: I18 K32 L15
    Date: 2017–01–13
  5. By: Hayat, Azmat
    Abstract: Policy prescription regarding addictive substances is one of the critical issues facing humanity since time immemorial. It is a universal truth that drug adductors are always trouble makers in terms of creating violence, corruption, incest and numerous other immoral and corrupt activities across the globe. In order to formulate the best and universal policy approach, the present study analyzed the policy prescription of economists and different religions. Christian church like the Jews not only permits but encourage the use of addictive substances in their various religious festivals. Mainstream economists case about addictive substances is based on confusion and contradiction. In sharp contrast Islam consider addictive substances as the mother of all evils and ills. Muslim jurists on one side strictly restrict the production and consumption of addictive substances, while on the other side through moral education its use is discouraged.
    Keywords: Wine, Drugs, Economics and Religion
    JEL: B59 I1 I18 K29 Z12 Z18
    Date: 2017–02–02

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