nep-law New Economics Papers
on Law and Economics
Issue of 2020‒09‒28
eleven papers chosen by
Eve-Angeline Lambert, Université de Lorraine

  1. On the Use of Outcome Tests for Detecting Bias in Decision Making By Ivan A. Canay; Magne Mogstad; Jack Mountjoy
  2. Global Software Piracy, Technology and Property Rights Institutions By Simplice A. Asongu
  3. Drugs on the Web, Crime in the Streets. The impact of Dark Web marketplaces on street crime By Diego Zambiasi
  4. Drivers and persistence of death in conflicts: global evidence By Simplice A. Asongu; Joseph I. Uduji; Elda N. Okolo-Obasi
  5. Removal of Potential Competitors – A Blind Spot of Merger Policy? By Massimo Motta; Martin Peitz
  6. Judge Peer Effects in the Courthouse By Ozkan Eren; Naci H. Mocan
  7. Bribing to Queue-Jump: An experiment on cultural differences in bribing attitudes among Greeks and Germans By Drichoutis, Andreas C.; Grimm, Veronika; Karakostas, Alexandros
  8. Homicide and Social Media: Global Empirical Evidence By Asongu, Simplice; Uduji, Joseph; Okolo-Obasi, Elda
  9. Collusion between two-sided platforms By Yassine Lefouili; Joana Pinho
  10. Racial Sympathy and Support for Capital Punishment: A Case Study in Concept Transfer By Hannan, Kellie; Cullen, Francis T.; Butler, Leah C.; Graham, Amanda; Burton, Alexander L.; Burton, Velmer S. Jr.
  11. Nudging for Tax Compliance: A Meta-Analysis By Armenak Antinyan; Zareh Asatryan

  1. By: Ivan A. Canay; Magne Mogstad; Jack Mountjoy
    Abstract: The decisions of judges, lenders, journal editors, and other gatekeepers often lead to disparities in outcomes across affected groups. An important question is whether, and to what extent, these group-level disparities are driven by relevant differences in underlying individual characteristics, or by biased decision makers. Becker (1957) proposed an outcome test for bias leading to a large body of related empirical work, with recent innovations in settings where decision makers are exogenously assigned to cases and vary progressively in their decision tendencies. We carefully examine what can be learned about bias in decision making in such settings. Our results call into question recent conclusions about racial bias among bail judges, and, more broadly, yield four lessons for researchers considering the use of outcome tests of bias. First, the so-called generalized Roy model, which is a workhorse of applied economics, does not deliver a logically valid outcome test without further restrictions, since it does not require an unbiased decision maker to equalize marginal outcomes across groups. Second, the more restrictive "extended" Roy model, which isolates potential outcomes as the sole admissible source of analyst-unobserved variation driving decisions, delivers both a logically valid and econometrically viable outcome test. Third, this extended Roy model places strong restrictions on behavior and the data generating process, so detailed institutional knowledge is essential for justifying such restrictions. Finally, because the extended Roy model imposes restrictions beyond those required to identify marginal outcomes across groups, it has testable implications that may help assess its suitability across empirical settings.
    JEL: C21 C26 C51 J15 J16 J71 K14 K42
    Date: 2020–09
  2. By: Simplice A. Asongu (Yaounde, Cameroon)
    Abstract: This study extends the literature on fighting software piracy by investigating how Intellectual Property Rights (IPRs) regimes interact with technology to mitigate software piracy when existing levels of piracy are considered. Two technology metrics (internet penetration rate and number of PC users) and six IPRs mechanisms (constitution, IPR law, main IP laws, WIPO Treaties, bilateral treaties and multilateral treaties) are used in the empirical analysis. The statistical evidence is based on: (i) a panel of 99 countries for the period 1994-2010 and (ii) interactive contemporary and non-contemporary Quantile regressions.The findings show that the relevance of IPR channels in the fight against software piracy is noticeably contingent on the existing levels of technology embodied in the pirated software. There is a twofold policy interest for involving modern estimation techniques such as interactive Quantile regressions. First, it uncovers that the impact of IPR systems on software piracy may differ depending on the nature of technologies used. Second, the success of initiatives to combat software piracy is contingent on existing levels of the piracy problem. Therefore, policies should be designed differently across nations with high-, intermediate- and low-levels of software piracy.
    Keywords: Piracy; Business Software; Software piracy; Intellectual Property Rights
    JEL: F42 K42 O34 O38 O57
    Date: 2020–01
  3. By: Diego Zambiasi (University College Dublin)
    Abstract: The Dark Web has changed the way drugs are traded globally by shifting trade away from the streets and onto the web. In this paper, I study whether the Dark Web has an impact on street crime, a common side effect of traditional drug trade. To identify a causal effect, I use daily data from the US and exploit unexpected shutdowns of large online drug trading platforms. In a regression discontinuity design, I compare crime rates in days after the shutdowns to those immediately preceding them. I find that shutting down Dark Web markets leads to a significant increase in drug trade in the streets. However, the effect is short-lived. In the days immediately following shutdowns, drug-related crimes increase by five to almost ten percent but revert to pre-shutdown levels within ten days. I find no impact of shutdowns of Dark Web marketplaces on thefts, assaults, homicides and prostitution.
    JEL: K42 L13
    Date: 2020–07–10
  4. By: Simplice A. Asongu (Yaounde, Cameroon); Joseph I. Uduji (University of Nigeria, Nsukka, Nigeria); Elda N. Okolo-Obasi (University of Nigeria, Nsukka, Nigeria)
    Abstract: We investigate persistence and determinants of deaths from conflicts in a sample of 163 countries for the period 2010 to 2015. The empirical evidence is based on Generalised Method of Moments. First, the findings are contingent on income levels, religious-domination, landlockedness, regional proximity and legal origins. The persistence of deaths in internal conflict is more apparent in coastal, French civil-law and Islam-oriented countries, compared to landlocked, English common law, Christian-oriented countries, respectively. Second, the following factors are generally responsible for driving deaths from internal conflicts: homicides, conflict intensity and conflicts fought. Furthermore, incarcerations have negative effects on internal conflicts. Justifications for the established tendencies and policy implications are discussed.
    Keywords: War; Conflicts; Global evidence; Persistence
    JEL: H56 L64 K42 P50
    Date: 2020–01
  5. By: Massimo Motta; Martin Peitz
    Abstract: In dynamic industries, firms often face new competitive threats. If firms are able to identify those threats early on, they may simply acquire potential competitors under the radar of competition authorities. Merger policy thus has to deal with two issues: (1) how to make sure that potentially problematic mergers are notified and investigated; and (2) how to assess the social costs and benefits of such mergers. The latter requires to take a stance regarding the standard and burden of proof. We argue for a reversal of burden of proof, at least if one of the merging firms is considered to be a “systemic firm”.
    Keywords: Merger policy, potential competitor, notification, standard of proof, burden of proof, killer acquisition
    JEL: K21 L41
    Date: 2020–08
  6. By: Ozkan Eren; Naci H. Mocan
    Abstract: Although there exists a large literature analyzing whether an individual’s peers have an impact on that individual’s own behavior and subsequent outcomes, there is paucity of research on whether peers influence a person’s decisions and judgments regarding a third party. We investigate whether consequential decisions made by judges are impacted by the gender composition of these judges’ peer group. We utilize the universe of decisions on juvenile defendants in each courthouse in Louisiana between 1998 and 2012. Leveraging random assignment of cases to judges, and variations in judge peer composition generated by elections, retirements, deaths and resignations, we show that an increase in the proportion of female peers in the courthouse causes a rise in individual judges’ propensity to incarcerate, and an increase in the assigned sentence length. This effect is fully driven by female judges. Further analysis suggests that this behavior is unlikely to be a reflection of an effort to conform to evolving norms of judicial stringency, measured by peers’ harshness in sentencing, but that it is due to the sheer exposure to female colleagues.
    JEL: D9 D91 J16 J71 K4 K41
    Date: 2020–08
  7. By: Drichoutis, Andreas C.; Grimm, Veronika; Karakostas, Alexandros
    Abstract: We study the role of culture on bribing attitudes in a new dynamic bribery game, where the purpose of bribing is to receive a service earlier by bribing to queue-jump. Our queue-jumping game allows us to distinguish between two classes of bribes: (i) queue-jumping bribes, which aim to increase the briber's expected earnings by jumping the queue, and (ii) counter bribes, which aim to maintain the briber's expected earnings by upholding the current order in the queue. In a laboratory experiment, comprised of four treatments that differ in the number of Greeks and Germans in each group, we analyze both cross-cultural and inter-cultural differences in bribing attitudes. In our cross-cultural treatments, we find that Greeks tend to bribe more often than Germans, but only in the early periods of the game. As time progresses, the Germans quickly catch-up, bribing as often as the Greeks. However, the observed differences in bribe rates in the early periods of the game are driven by queue-jumping bribes rather than counter-bribes. As the ratio of counter-bribes to queue-jumping bribes is significantly lower among Greeks relative to Germans, bribing to queue-jump is more profitable in the Greek groups. In our inter-cultural treatments, we find that minorities, irrespective of nationality, bribe less, despite there are no prospects for monetary or reputational gains. We interpret this result as evidence of outgroup favoritism by minority groups.
    Keywords: Antisocial Behavior; Corruption; Cross-Country Experiment; Inter-country Experiment; Social Norms
    JEL: C73 C91 C92 D62 D73 H49 Z10
    Date: 2020–09–09
  8. By: Asongu, Simplice; Uduji, Joseph; Okolo-Obasi, Elda
    Abstract: This study investigates the relationship between social media and homicide in a cross section of 148 countries for the year 2012. The empirical evidence is based on Ordinary Least Squares, Tobit and Quantile regressions. The findings from Ordinary Least Squares and Tobit regressions show a negative relationship between Facebook penetration and the homicide rate. The negative relationship is driven by the 75th quantile of the conditional distribution of the homicide rate. The negative nexus is also driven by upper middle income countries and “Europe and Central Asia”. Three main implications are apparent when the findings are compared and contrasted. First, established findings from OLS and Tobit regressions are driven by countries with above-median levels of homicide. Second, such above-median countries are largely associated with upper middle income countries and nations in “Europe and Central Asia”. Third, modelling the relationship between Facebook penetration and homicide at the conditional mean of homicide may be misleading unless it is contingent on initial levels of homicide and tailored differently across income levels and regions of the world.
    Keywords: Homicide; Social media
    JEL: D74 D83 K42 O30
    Date: 2019–01
  9. By: Yassine Lefouili (TSE - Toulouse School of Economics - UT1 - Université Toulouse 1 Capitole - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Joana Pinho (Universidade Católica Portuguesa [Porto])
    Abstract: We study the price and welfare effects of collusion between two-sided platforms and show that they depend on whether collusion occurs on both sides or a single side of the market, and whether users single-home or multi-home. Our most striking result is that one-sided collusion leads to lower (resp. higher) prices on the collusive (resp. competitive) side if the cross-group externalities exerted on the collusive side are positive and sufficiently strong. One-sided collusion may, therefore, benefit the users on the collusive side and harm the users on the competitive side. Our findings have implications regarding cartel detection and damages actions.
    Keywords: Collusion,Two-sided markets,Cross-group externalities
    Date: 2020–09
  10. By: Hannan, Kellie; Cullen, Francis T.; Butler, Leah C.; Graham, Amanda (Georgia Southern University); Burton, Alexander L.; Burton, Velmer S. Jr.
    Abstract: Beliefs about race, especially racial resentment, are key predictors of public support for capital punishment and punitiveness generally. Drawing on a conceptual innovation by political scientist Jennifer Chudy, we explore the utility of transferring into criminology her construct of racial sympathy—or Whites’ concern about Blacks’ suffering. First, across three data sets, we replicate Chudy’s finding that racial sympathy and resentment are empirically distinct constructs. Second, based on a national-level 2019 YouGov survey (n = 760 White respondents) and consistent with Chudy’s thesis, racial sympathy is then shown to be significantly related to the race-specific view that capital punishment is discriminatory but not support for the death penalty or harsher courts. Racial sympathy also is positively associated with advocacy of rehabilitation as the main goal of prison. Notably, in all models, racial resentment has robust effects, increasing punitive sentiments. Taken together, the results suggest that racial sympathy is a concept that can enrich criminologists’ study of how race shapes crime policy preferences in the United States and beyond.
    Date: 2020–06–18
  11. By: Armenak Antinyan; Zareh Asatryan
    Abstract: Tax compliance nudges are used increasingly by governments because of their perceived cost-effectiveness in raising tax revenue. We collect about a thousand treatment effect estimates from 45 randomized controlled trials, and synthesize this rapidly growing literature using meta-analytical methods. We show that interventions pointing to elements of individual tax morale are on average ineffective in curbing tax evasion (when evaluated against a control group of taxpayers receiving neutral communication). In contrast, deterrence nudges - interventions emphasizing traditional determinants of compliance such as audit probabilities and penalty rates - increase compliance. However, their effects are modest in magnitude increasing the probability of compliance by 1.5-2.5 percentage points more than non-deterrence nudges. Our additional results suggest that nudges i) work better on sub-samples of late payers and when delivered in-person, ii) are less effective in the long-run and in lower-income countries, and iii) are somewhat inflated by selective reporting of results.
    Keywords: tax compliance, randomized control trials, nudging, tax morale, meta-analysis
    JEL: C93 D91 H26
    Date: 2020

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