nep-law New Economics Papers
on Law and Economics
Issue of 2023‒10‒02
seven papers chosen by
Yves Oytana, Université de Franche-Comté

  1. Privacy Regulation and Quality-Enhancing Innovation By Yassine Lefouili; Leonardo Madio; Ying Lei Toh
  2. The Pervasive Influence of Ideology at the Federal Circuit Courts By Alma Cohen
  3. Platform Liability with Reputational Sanctions By Alessandro De Chiara; Juan-José Ganuza; Fernando Gómez; Ester Manna; Adrián Segura
  4. A Cognitive View of Policing By Oeindrila Dube; Sandy Jo MacArthur; Anuj K. Shah
  5. Reclaiming the Relational Ontology of the Fiduciary and Exploring Relational Ethics By Helen Mussell
  6. Paper on Economic Sanctions and the Law of Central Bank Immunity in the United States By Richard Ostrander
  7. Market Response to Racial Uprisings By Bocar A. Ba; Roman Rivera; Alexander Whitefield

  1. By: Yassine Lefouili (Toulouse School of Economics); Leonardo Madio (University of Padova and CESifo); Ying Lei Toh (Federal Reserve Bank of Kansas City)
    Abstract: We analyze how a privacy regulation taking the form of a cap on information disclosure affects quality-enhancing innovation incentives by a monopolist— who derives revenues solely from disclosing user data to third parties—and consumer surplus. If the share of privacy-concerned users is sufficiently small, privacy regulation has a negative effect on innovation and may harm users. However, if the share of privacy-concerned users is sufficiently large, privacy regulation has a positive effect on innovation. In this case, there is no trade-off between privacy and innovation and users always benefit from privacy regulation.
    Keywords: Privacy Regulation, Data Disclosure, Innovation
    Date: 2023–07
  2. By: Alma Cohen
    Abstract: This paper seeks to contribute to the long-standing debate on the extent to which the ideology of federal circuit court judges, as proxied by the party of the president nominating them, can help to predict case outcomes. To this end, I combine and analyze a novel dataset containing about 670, 000 circuit court cases from 1985 to 2020. I show that the political affiliation of judges is associated with outcomes, and thus can help to predict them, throughout the vast universe of circuit court cases – and not only in the ideologically contested cases on which prior empirical research has focused. In particular, I find an association between political affiliation and outcomes in each of six categories of cases in which the two litigating parties could be perceived by judges to have unequal power. In each of these six case categories, which together add up to more than 550, 000 cases, the more Democratic judges a panel has, the higher the odds of the panel siding with the seemingly weaker party. Furthermore, I identify evidence of polarization over time in circuit court decisions. Consistent with such growing polarization, in the important subset of published cases, the identified patterns are more pronounced in the last two decades of the examined period than earlier. Going beyond the very large sample of cases with parties of seemingly of unequal power, I identify how political affiliation can help to predict outcomes in most of the cases outside this sample. In particular, I show that panels with more Democratic judges are less likely than panels with less Democratic judges to defer to the lower-court decision in civil cases between private parties that seem to be of equal power. Altogether, my analysis shows that political affiliation can help to predict outcomes in over 90% of circuit court cases. Overall, my results highlight the pervasiveness with which – and the array of ways through which – the political affiliation of judges can help to predict the outcome of circuit court cases.
    JEL: D72 J15 J16 K0
    Date: 2023–07
  3. By: Alessandro De Chiara; Juan-José Ganuza; Fernando Gómez; Ester Manna; Adrián Segura
    Abstract: This paper presents a framework where sellers, an online platform with monopoly power, and consumers transact. We aim to study the interaction between the imposition of liability on the platform, the reputational sanctions exerted by consumers, and the internal measures adopted by the platform to keep in check the sellers, whenever a product generates losses to consumers. We show that introducing direct legal liability of the platform may have both positive and negative effects for safety investments. Additionally, when sellers are heterogeneous (with respect to their sensitivity to the sanctions from consumers or from the platform), legal liability on the platform will have an impact on the selection of participating sellers, although the sign and size of the effect largely depend on paremeter values.
    Keywords: platform liability, third-party sellers, reputation
    JEL: K13 L15 L51
    Date: 2023–09
  4. By: Oeindrila Dube; Sandy Jo MacArthur; Anuj K. Shah
    Abstract: What causes adverse policing outcomes, such as excessive uses of force and unnecessary arrests? Prevailing explanations focus on problematic officers or deficient regulations and oversight. Here, we introduce a new, overlooked perspective. We suggest that the cognitive demands inherent in policing can undermine officer decision-making. Unless officers are prepared for these demands, they may jump to conclusions too quickly without fully considering alternative ways of seeing a situation. This can lead to adverse policing outcomes. To test this perspective, we created a new training that teaches officers to more deliberately consider different ways of interpreting the situations they encounter. We evaluated this training using a randomized controlled trial with 2, 070 officers from the Chicago Police Department. In a series of lab assessments, we find that treated officers were significantly more likely to consider a wider range of evidence and develop more explanations for subjects' actions. Critically, we also find that training affected officer performance in the field, leading to reductions in uses of force, discretionary arrests, and arrests of Black civilians. Meanwhile, officer activity levels remained unchanged, and trained officers were less likely to be injured on duty. Our results highlight the value of considering the cognitive aspects of policing and demonstrate the power of using behaviorally informed approaches to improve officer decision-making and policing outcomes.
    JEL: C91 C93 D03 D91 J08 K40 K42
    Date: 2023–09
  5. By: Helen Mussell
    Abstract: Despite the omnipresence of the fiduciary in organisations, there is an omission of contemporary theorisations of this legal concept within the organisational theory literature. This is particularly surprising given the situation that the presence of ethics within the fiduciary is increasingly contested ground, with clear implications for managerial practice. This article addresses the lacuna by theorising the fiduciary using an original ontological analysis, alongside identifying a suitable ethical framework. It argues on two grounds that the ontology of the fiduciary is inherently relational. The fiduciary’s process-oriented focus is shown to indicate an open, emergent, and relational ontology at work. Secondly, historical investigation of the development of the fiduciary highlights its core relationship structure, and the interdependency and power dynamic embedded in the fiduciary are revealed. The argument is advanced that by bringing this inherent relational ontology to the fore, we can see how a relational ethical framework – the Ethics of Care – is best placed to explicate the ethics at work. The article concludes with a discussion outlining how the ontological theorisation offers utility in steering future practice of the fiduciary.
    Keywords: Fiduciary duty, Contract Law, Modern Portfolio Theory, Ethics of
    JEL: B11 B26 B54 G11 G30 G32 K12 K13
    Date: 2021–12
  6. By: Richard Ostrander
    Abstract: Paper prepared for Panel Discussion on Central Bank Immunities and International Sanctions, ECB Legal Conference 2023, Frankfurt am Main, Germany.
    Keywords: economic sanctions; central bank
    Date: 2023–09–05
  7. By: Bocar A. Ba; Roman Rivera; Alexander Whitefield
    Abstract: Do investors anticipate that demands for racial equity will impact companies? We explore this question in the context of the Black Lives Matter (BLM) movement—the largest racially motivated protest movement in U.S. history—and its effect on the U.S. policing industry using a novel dataset on publicly traded firms contracting with the police. It is unclear whether the BLM uprisings were likely to increase or decrease market valuations of firms contracting heavily with police because of the increased interest in reforming the police, fears over rising crime, and pushes to “defund the police”. We find, in contrast to the predictions of economics experts we surveyed, that in the three weeks following incidents triggering BLM uprisings, policing firms experienced a stock price increase of seven percentage points relative to the stock prices of nonpolicing firms in similar industries. In particular, firms producing surveillance technology and police accountability tools experienced higher returns following BLM activism–related events. Furthermore, policing firms’ fundamentals, such as sales, improved after the murder of George Floyd, suggesting that policing firms’ future performances bore out investors' positive expectations following incidents triggering BLM uprisings. Our research shows how—despite BLM’s calls to reduce investment in policing and explore alternative public safety approaches—the financial market has translated high-profile violence against Black civilians and calls for systemic change into shareholder gains and additional revenues for police suppliers.
    JEL: D73 G14 G3 K42
    Date: 2023–08

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