nep-law New Economics Papers
on Law and Economics
Issue of 2017‒09‒03
nine papers chosen by
Eve-Angeline Lambert, Université de Lorraine

  1. Media and crime perceptions: Evidence from Mexico By Aurora Alejandra Ramirez-Alvarez
  2. Jobs for Justice(s):Corruption in the Supreme Court of India By Aney, Madhav; Dam, Shubhankar; Ko, Giovanni
  3. Did Parental Involvement Laws Grow Teeth? The Effects of State Restrictions on Minors' Access to Abortion By Myers, Caitlin Knowles; Ladd, Daniel
  4. Committing the English and the Continental Way – An Experiment By Christoph Engel; André Schmelzer
  5. International Environmental Agreement and the Timing of Domestic Lobbying By Etienne Farvaque; Norimichi Matsueda
  6. Seniors for Hire? Age Discrimination, †Sex-Plus-Age" Discrimination, and the Effectiveness of Age Discrimination Laws By Patrick Button
  7. Behavioral Antitrust By Steven Martin
  8. Optimal insurance for catastrophic risk: theory and application to nuclear corporate liability By Alexis Louaas; Pierre Picard
  9. Property rights on First Nations’ reserve land By Fernando M. Aragon; Anke Kessler

  1. By: Aurora Alejandra Ramirez-Alvarez (El Colegio de México)
    Abstract: This paper examines whether individuals' crime perceptions and crime avoidance behavior respond to changes in crime news coverage. I use data from Mexico, where major media groups agreed to reduce coverage of violence in March 2011. Using a unique dataset on national news content and machine learning techniques, I document that after the Agreement, crime news coverage on television, radio, and newspapers decreases relative to the national homicide rate. Using survey data, I find robust evidence that crime perceptions respond to this change in content. After the Agreement, individuals with higher media exposure are less likely to report that they feel insecure and that their country, state, or municipality is insecure, relative to individuals with lower media exposure. However, I show that these changes in crime perceptions are not accompanied by changes in crime avoidance behavior (i.e. no longer going out at night for fear of being a victim of crime), or at least that e ects are much smaller.
    Keywords: mass media; persuasion; crime perception; Mexico.
    JEL: D83 K42 L82
    Date: 2017–05
  2. By: Aney, Madhav (School of Economics, Singapore Management University); Dam, Shubhankar (School of Law, City University of Hong Kong); Ko, Giovanni (Division of Economics, Nanyang Technological University)
    Abstract: We investigate whether judicial decisions are affected by career concerns of judges by analysing two questions: Do judges respond to pandering incentives by ruling in favour of the government in the hope of receiving jobs after retiring from the Court? Does the government actually reward judges who ruled in its favour with prestigious jobs? To answer these questions we construct a dataset of all Supreme Court of India cases involving the government from 1999 till 2014, with an indicator for whether the decision was in its favour or not. We find that pandering incentives have a causal effect on judicial decision-making. The exposure of a judge to pandering incentives in a case is jointly determined by 1) whether the case is politically salient (exogenously determined by a system of random allocation of cases) and 2) whether the judge retires with enough time left in a government’s term to be rewarded with a prestigious job (date of retirement is exogenously determined by law to be their 65th birthday). We find that pandering occurs through through the more active channel of writing favourable judgements rather than passively being on a bench that decides a case in favour of the government. Furthermore, we find that deciding in favour of the government is positively associated with both the likelihood and the speed with which judges are appointed to prestigious post-Supreme Court jobs. These findings suggest the presence of corruption in the form government influence over judicial decision-making that seriously undermines judicial independence.
    Keywords: Judicial decision-making; Corruption; Career concerns; Public sector incentives
    Date: 2017–02–13
  3. By: Myers, Caitlin Knowles (Middlebury College); Ladd, Daniel (University of California, Irvine)
    Abstract: We compile data on the locations of abortion providers and enforcement of parental involvement laws to document dramatic increases in the distances minors must travel if they wish to obtain an abortion without involving a parent or judge. Between 1992 – the year the U.S. Supreme Court established the undue burden standard in Planned Parenthood v. Casey – and present, the average distance to a confidential abortion has increased from 55 to 454 miles. Using both double and triple-difference estimation strategies, we estimate the effects of parental involvement laws, and allow these effects to vary with the distances minors might travel to avoid them. Our results confirm previous findings that parental involvement laws did not increase teen births in the pre-Casey era, and provide new evidence that in more recent decades they have increased teen birth by an average of 3 percent. The estimated effects are increasing in avoidance distance to the point that a confidential abortion is more than a day's drive away, and also are 4 to 6 times greater in counties with high rates of poverty. We estimate that over the past 25 years, parental involvement laws have resulted in half a million additional teen births.
    Keywords: abortion, fertility
    JEL: I11 I12 J13
    Date: 2017–08
  4. By: Christoph Engel (Max Planck Institute for Research on Collective Goods); André Schmelzer (Max Planck Institute for Research on Collective Goods)
    Abstract: On the doctrinal surface, there is a deep divide between common and continental law when it comes to the origin of contractual obligations. Under continental law, in principle a unilateral promise suffices. Common law by contrast requires consideration. When it comes to deciding cases, the divide is much less pronounced. But for the most part the law does not govern people's lives through adjudication. It matches or molds their moral intuitions. We test these intuitions in the lab. If consideration is required, participants believe that all participants make more ambitious promises. But they themselves make a more cautious promise. These two effects cancel out, so that promises are not more likely to be kept with consideration.
    Keywords: contract, obligation, promise, consideration, experiment, modified dictator game
    JEL: C91 D02 D03 D12 D64 H41 K12
    Date: 2017–08
  5. By: Etienne Farvaque (Faculty of Economic and Social Sciences, University of Lille 1); Norimichi Matsueda (School of Economics, Kwansei Gakuin University)
    Abstract: We incorporate domestic lobbying activities into a policymaker's decision mak-ing on whether or not to sign a cooperative bilateral environmental agreement and, if not, how much pollution a country emits. There are environmental and industrial lobbyists who attempt to sway the policymaker's decision toward their respectively favored policies. As is usually the case with a common agency model, they present contribution schedules that are tied to resulting policy choices. We focus on the impacts of the timing of lobbying activities. The first type of lobbying occurs on the signing of a cooperative agreement, and the second when each nation chooses its own emission level after the agreement is not signed or one of the signatories reneges on its promise. We compare the outcomes of the four different cases: (i) no lobbying activity; (ii) lobbying conducted at the agreement signing stage; (iii) lob-bying conducted when non-cooperative choice is made; and (iv) lobbying at every occasion. Our results suggest that the timing of lobbying has a critical impact on the signing of a cooperative agreement, and that the lobbying activities can pose a hindrance to the signing of an agreement even when environmental interests are represented by lobby groups in a similarly high proportion as industrial ones.
    Keywords: common agency, compensating equilibrium, environmental agreement, global pollution, lobbying.
    JEL: K23 Q58
    Date: 2017–08
  6. By: Patrick Button (Department of Economics, Tulane University)
    Abstract: In this paper I discuss population aging, increased participation of seniors in the labor force in the United States (and reasons for this), and how these trends are making the struggles of older workers in the labor market increasingly policy relevant. I discuss evidence examining if age discrimination, especially age discrimination against older women ("sex-plus-age" discrimination), as a barrier for seniors as they try to increase their work lives through the common practice of "bridge" or "partial retirement" jobs. After discussing the evidence that measures age discrimination, I discuss economics and legal research that seeks to determine to what extent the federal Age Discrimination in Employment Act and state-level age discrimination laws prevent age and "sex-plus-age" discrimination. I conclude that while age discrimination laws seem to help mitigate some age discrimination faced by older men, older women face more age discrimination, and current age discrimination laws do a poor job of protecting older women, who are even more economically vulnerable.
    Keywords: Age discrimination, older women, Age Discrimination in Employment Act, population aging, intersectionality
    JEL: J71 J78 J14 K31 J16 J26
    Date: 2017–08
  7. By: Steven Martin
    Abstract: In this chapter, I review the rational economic man model and con- trast it with evidence of bounded rationality that has emerged since the last quarter of the previous century. I discuss the implications of bounded rationality for research in industrial economics, with par- ticular attention to the analysis of predation, collusion, and entry. I conclude by drawing implications for the antitrust rules toward domi- nant ?rm behavior that come out of the Matsushita and Brooke Group decisions.
    Keywords: behavioral economics; antitrust; predation; collusion; entry.
    JEL: L1 L4 D9
    Date: 2017–08
  8. By: Alexis Louaas (Department of Economics, Ecole Polytechnique - Polytechnique - X - CNRS - Centre National de la Recherche Scientifique); Pierre Picard (Department of Economics, Ecole Polytechnique - Polytechnique - X - CNRS - Centre National de la Recherche Scientifique)
    Abstract: This paper analyzes the optimal insurance for low probability - high severity accidents, such as nuclear catastrophes, both from theoretical and applied standpoints. We show that the risk premium of such catastrophic events may be a non-negligible proportion of individuals’ wealth when the index of absolute risk aversion is sufficiently large in the accident state, and we characterize the optimal asymptotic insurance coverage when the probability of the accident tends to zero. In the case of the limited liability of an industrial firm that may cause large scale damage, the limit corporate insurance contract corresponds to a straight deductible indemnification rule, in which victims are ranked according to the severity of their losses. As an application of these general principles, we consider the optimal corporate liability insurance for nuclear risk, in a setting where the risk is transferred to financial markets through catastrophe bonds. A model calibrated with French data allows us to estimate the optimal liability of a nuclear energy producer. This leads us to the conclusion that the lower limit adopted in 2004 through the revision of the Paris Convention is probably inferior to the socially optimal level.
    Keywords: risk aversion, liability insurance, catastrophic risk,nuclear accident
    Date: 2017–05–24
  9. By: Fernando M. Aragon (Simon Fraser University); Anke Kessler (Simon Fraser University)
    Abstract: This paper examines the economic effects of existing private property rights on First Nations’ reserves. We focus on three forms of land tenure regimes: lawful possession, designated land, and permits. These land regimes have been used to create individual land holdings, and grant, secure and transferable, rights of use of reserve land to band and non-band members. Using confidential Census micro-data and rich administrative data, we find evidence of improvements in home ownership and housing conditions, as well as increments in band’s public spending. However, we do not find significant effects on household income nor employment outcomes. Instead, we document a sizeable increase in non-Aboriginal population. Our findings suggest that some caution is warranted when discussing the potential economic benefits of property rights reforms for First Nations’ communities.
    Keywords: First Nations, property rights, lawful possession
    Date: 2017–08

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