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on Law and Economics |
| By: | Giovanni Mastrobuoni; Emily Owens |
| Abstract: | We propose a new framework to investigate whether criminals exhibit strategic behavior in response to the criminal law and their enforcement. Unique data on commercial robberies in Milan allow us to examine the decisions robbers make regarding weapon choice, number of accomplices, and the type of business targeted. Our analysis explores the relationship between these decisions, the expected return from the robbery, and the probability of arrest, considering the constraints imposed by Italian law, which prescribes differential punishments based on certain criminal choices. We find some evidence that robbers act in accordance with expected utility maximization, particularly when operating in groups. |
| Keywords: | Police, Crime, Robberies, Strategic Behavior. |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:cca:wpaper:741 |
| By: | Yong Suk Lee |
| Abstract: | This paper examines the racial implications of police interaction with algorithms, particularly in the context of racial disparities in rearrest predictions. Our experimental study involved showing police officers the profiles of young offenders and asking them to predict rearrest probabilities within three years, first without and then after seeing the algorithm’s assessment. The experiment varied the visibility of the offender’s race (revealed to one group, hidden in another group, and mixed (some shown and some hidden) in the other group). Additionally, we explored how informing officers about the model’s accuracy affected their responses. Our findings indicate that officers adjust their predictions towards the algorithm’s assessment when the race of the profile is disclosed. However, these adjustments exhibit significant racial disparities, with a significant gap in initial rearrest predictions between Black and White offenders even when all observable characteristics are controlled for. Furthermore, only Black officers significantly reduced their predictions after viewing the the algorithm’s assessments, while White officers did not. Our findings reveal the limited and nuanced effectiveness of algorithms in reducing bias in recidivism predictions, underscoring the complexities of algorithm-assisted human judgment in criminal justice. |
| Keywords: | human-computer interaction, artificial intelligence, algorithmic prediction, racial bias, criminal justice |
| JEL: | C10 D63 K40 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11877 |
| By: | John Eric Humphries (Yale University); AurŽlie Ouss (University of Pennsylvania); Kamelia Stavreva (Columbia University); Megan T. Stevenson (University of Virginia Law School); Winnie van Dijk (Yale University) |
| Abstract: | Noncarceral conviction is a common outcome of criminal court cases: for every individual incarcerated, there are approximately three who were recently convicted but not sentenced to prison or jail. We extend the binary-treatment judge IV framework to settings with multiple treatments and use it to study the consequences of noncarceral conviction. We outline assumptions under which widely-used 2SLS regressions recover margin-specific treatment effects, relate these assumptions to models of judge decision-making, and derive an expression that provides intuition about the direction and magnitude of asymptotic bias when a key assumption on judge decision-making is not met. We find that noncarceral conviction (relative to dismissal) leads to a large and long-lasting increase in recidivism for felony defendants in Virginia. In contrast, incarceration (relative to noncarceral conviction) leads to a short-run reduction in recidivism, consistent with incapacitation. Our empirical results suggest that noncarceral felony conviction is an important and overlooked driver of recidivism. |
| Date: | 2025–03–01 |
| URL: | https://d.repec.org/n?u=RePEc:cwl:cwldpp:2442 |
| By: | Janine Boshoff; Stephen Machin; Matteo Sandi |
| Abstract: | This paper combines ten years of idiosyncratic variation in school closure dates for all secondary schools in England with administrative records of educational and criminal trajectories linked at the individual level to study the impact of the school schedule on the dynamics of youth crime. When school is not in session, students commit more property offences, more serious violent offences and fewer minor violent offences. Thefts, robberies and violent assaults drive these effects. This is novel evidence of strong incapacitation effects from the protective factor of schooling which affects not only the incidence of violence, but also its severity. |
| Keywords: | crime, school attendance, exclusion |
| Date: | 2025–04–10 |
| URL: | https://d.repec.org/n?u=RePEc:cep:cepdps:dp2092 |
| By: | Jasmina Karabegovic (University of Graz, Austria) |
| Abstract: | This paper examines the role of international courts in international agreements, focusing on the WTO and its Dispute Settlement Body (DSB) in the Airbus-Boeing dispute. We model the court as an information provider in a repeated game setting with imperfect public monitoring. For patient governments (the players in this game), efficient agreements are self-enforcing, rendering the court redundant. When governments are less patient, only inefficient agreements are self-enforcing without courts. We provide equilibria in which access to a court enables governments to sustain (substantially) more efficient outcomes relative to the case without courts, regardless of how patient governments are. |
| Keywords: | Repeated games, imperfect public monitoring, international trade, dispute resolution |
| JEL: | C72 C73 D02 F13 |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:grz:wpaper:2025-05 |
| By: | Buchetti, Bruno; Miquel-Flores, Ixart; Fabrizi, Michele; Ipino, Elisabetta; Parbonetti, Antonio |
| Abstract: | This study examines how dismantling Mafia-connected firms affects banks’ lending practices. Using a unique dataset of 667 such firms and loan-level data from the European Central Bank, our analysis shows that anti-Mafia operations precede an increase in bank loans to businesses that operate in areas that are directly affected by these actions. Specifically, overall loan volumes increase by approximately 0.8 percent, which translates to an increase of €1.38 billion in bank loans to these firms. The effect increases to 1.2 percent in areas that have experienced extensive Mafia activities, amounting to €2.76 billion in bank loans, and to 2.1 percent in areas that were once dominated by Mafia-connected firms that were engaged in rent extraction, amounting to €3.62 billion in bank loans. Borrowing costs rise concurrently, driven by heightened perceptions of risk following exposure of Mafia infiltration. Cross-sectional analyses indicate that banks’ responses vary significantly because non-local and foreign banks and banks with no prior exposure to Mafia-affiliated firms face increased challenges related to their lack of local knowledge. Removal of Mafia-connected firms also correlates with improved productivity in affected municipalities, underscoring financial institutions’ dynamic responses to the eradication of organized crime and the potential for economic revitalization in post-Mafia environments. JEL Classification: E52, E58, G11 |
| Keywords: | credit market, credit risk, organized crime |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:ecb:ecbwps:20253060 |
| By: | Jasmina Karabegovic (University of Graz, Austria); Christoph Kuzmics (University of Graz, Austria) |
| Abstract: | International cooperation sometimes requires flexible agreements that permit temporary non-compliance in certain circumstances. Whether these circumstances occur is often only privately known by the non-complying partner. This paper analyzes how an international court that can only provide information without having any enforcement power can help sustain such flexible international agreements. We study this in a repeated game setting where the monitoring is public but imperfect. We find that for sufficiently patient governments there are in principle highly efficient self-enforcing agreements available. We then focus on the case of impatient governments and identify conditions under which an international court without enforcement power could indeed improve the efficiency of agreements. |
| Keywords: | Repeated games, imperfect public monitoring, international trade, dispute resolution |
| JEL: | C72 C73 D02 F13 |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:grz:wpaper:2025-04 |
| By: | Jose Portela; Eduardo S. Schwartz; Jaime Aparicio Garcia |
| Abstract: | Legal claims are increasingly being considered as an alternative asset class, however, there appears to be a lack of a standard methodology for valuing litigation risk. This paper proposes a dynamic real options framework for the valuation of legal claims, explicitly incorporating the uncertainty and sequential nature of litigation processes. We develop a continuous-time stochastic model that accounts for the main procedural milestones and uncertainties, enabling the simulation of diverse litigation trajectories to estimate the net present value of a claim. The model permits the decision-maker to optimally continue or abandon the litigation at various stages, thereby capturing the embedded option value and enhancing claim valuation. This approach offers a novel risk management and valuation tool for a range of stakeholders, including investors, third-party funders, claimants, defendants, legal practitioners, auditors, and insurers. We demonstrate the practical relevance of the methodology by applying it to an actual international investment arbitration case. |
| JEL: | G01 G11 K0 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33790 |
| By: | Jerg Gutmann; Pascal Langer; Matthias Neuenkirch |
| Abstract: | It is well-established that political leaders matter for domestic outcomes, but statistical evidence for their relevance in international politics is still scarce. Here, we ask whether the personal relationship between political leaders can change the propensity for nonviolent conflict between nation-states in the form of sanctions. Panel probit models with data for the period 1970 to 2004 are estimated to evaluate whether more similar leaders are less likely to sanction each other. Our results indicate that higher leader similarity significantly reduces the likelihood of sanction imposition. The effect is most pronounced for sanctions imposed through unilateral political decisions. The probability of such sanction imposition ranges from 4.9% at the highest observed leader similarity in the sample to 13.0% at the lowest. Leader similarity seems to matter especially for sanctions aimed at democratic change or human rights improvements, for non-trade sanctions, and when at least one autocracy is involved. Finally, leader similarity has become more important after the Cold War. |
| Keywords: | geoeconomics, international sanctions, leader similarity, political leaders |
| JEL: | D70 F51 K33 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11921 |