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on Law and Economics |
| By: | Cohen, Alma; Dehejia, Rajeev |
| Abstract: | We examine how politicization and polarization influence judicial review within U.S. Federal appellate courts. Analyzing over 400, 000 cases from 1985 to 2020, we find that judges' political alignment or misalignment with trial judges increasingly affect their decisions, particularly in the last two decades. This trend is significant in precedential cases: panels of Democratic judges are 6.9 percentage points more likely to reverse Republican trial judges compared to Democratic ones, whereas Republican panels are 3.6 percentage points less likely to reverse fellow Republican judges. This effect persists across ideological and non-ideological cases and even among judges appointed before 2000. |
| Keywords: | Judicial decisions |
| JEL: | K0 H0 |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:19487 |
| By: | Derek Mikola; Matthew D. Webb |
| Abstract: | Civilian firearm ownership is politically contentious, yet most evidence linking guns to crime and death comes from the U.S. Canada offers a unique case: strict national regulations alongside widespread legal ownership. Using new administrative data from 2013-2019, we examine associations between gun prevalence and homicides, suicides, and firearms-related crime. During this period, we find that handgun ownership rose 50\% and restricted licenses by 70\%. Recent legislation proposes a handgun freeze and rifle buyback. We assess whether these measures are likely to improve safety or whether existing laws already strike a balance. We find little evidence of a strong relationship. |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2607.20667 |
| By: | Dmitrii Shchetinin (Erasmus University Rotterdam); Stanislav Avdeev (University of Amsterdam) |
| Abstract: | International trade depends on the expectation that courts will protect commercial interests when disputes arise. With the growing number of international conflicts, it is crucial to know whether this expectation is met in practice. We examine the effect of the 2014 annexation of Crimea on the enforcement rate of foreign decisions by Russian and Ukrainian judges. We assemble novel data on the entire universe of Russian and Ukrainian court decisions concerning the enforcement of foreign decisions resolving cross-border commercial disputes. Using a difference-in-differences design, we find that the enforcement rate of Ukrainian (Russian) decisions in Russia (Ukraine) fell by 26% (33%) after the annexation. We show that courts increasingly justified refusals through discretionary legal grounds and undue-notification claims. Our findings provide the first causal evidence that international conflict affects both judicial decision-making and compliance with commercial treaties. |
| Keywords: | Arbitration, Armed conflict, Cross-border commerce, Extrajudicial factors, International commercial disputes, Transnational litigation |
| JEL: | D74 F14 F51 F53 K33 |
| Date: | 2026–06–29 |
| URL: | https://d.repec.org/n?u=RePEc:tin:wpaper:20260042 |
| By: | Campedelli, Gian Maria; Daniele, Gianmarco; Le Moglie, Marco |
| Abstract: | Detection is one of the main challenges in the fight against organized crime. We show that machine learning can be used to predict mafias infiltration in Italian local governments, as measured by the dismissal of city councils infiltrated by organized crime. The model successfully predicts up to 96% of out-of-sample municipalities previously identified as infiltrated by mafias, up to two years earlier, making this index a valuable tool for identifying municipalities at risk of infiltration well in advance. Furthermore, we can identify “high-risk†local governments that may be infiltrated by organized crime but have not been detected by the state, thereby improving the efficacy of detection. We then apply this new time-varying measure of organized crime to investigate the underlying causes of this type of rent-seeking. As criminals infiltrate politics to capture public resources, we study how a positive shock in public spending (European Union transfers), affects this phenomenon. Employing a geographic Difference-in-Discontinuities design, we find a substantial and lasting increase in the predicted risk of mafia infiltration (up to 14 p.p.), emphasizing the unintended effects of delivering aid where criminal organizations can appropriate public funds. |
| Keywords: | Crime; Corruption; Politics; Elections |
| JEL: | D72 K4 |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:19322 |
| By: | Quy Lam (University of California, Merced); Ketki Sheth (Department of Economics, University of Tennessee) |
| Abstract: | Deterrence theory assumes that harsher penalties reduce misconduct by raising its cost. Yet enforcement often depends on individuals who witness or respond to wrongdoing, and their behavior may also be shaped by the severity of punishment. Using a high-powered online experiment framed in a workplace setting, we test whether increasing penalties reduces willingness to report. We find that harsher penalties suppress reporting: employees are 1 percentage point less likely to report for every 10 percentage point increase in the penalty. This effect is mediated by perceived fairness: reporting declines only when penalties are seen as excessive. Despite the decrease in reporting, higher penalties still deter misconduct overall, as their direct deterrent effect outweighs the indirect increase in law-breaking caused by lower reporting rates. We also find that individuals support harsher penalties before a violation occurs, when deterrence is relevant, but prefer more lenient consequences after the offense has happened. This helps explain how policies can arise and persist in equilibrium, even when people are unwilling to enforce them in practice. These findings advance understanding of how social norms and perceptions of fairness shape the decisions of those who observe misconduct, and highlight the need to design sanctions that align with public willingness to act on violations. More severe penalties can discourage reporting, weaken enforcement, and ultimately undermine the effectiveness of deterrence mechanisms. |
| Keywords: | Reporting; Whistle-blowing; Deterrence; Penalty Severity; Perceived Fairness; Misconduct; Enforcement; Online Experiment |
| JEL: | C91 D63 D91 K42 M54 |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:ten:wpaper:2026-02 |
| By: | How Choon, Thea; Marcolongo, Giovanna; Pinotti, Paolo |
| Abstract: | Pressure groups may use bribes, violence, or a combination of both to bend politics to their will, and the choice between these methods of influence can vary depending on the type of institutional regime. We empirically investigate the dynamics of bribes and violence around elections in democracies and autocracies using a novel measure of corruption based on the Panama Papers and other massive data leaks on offshore entities in tax havens, which are often used as vehicles for bribes, and data on attacks against politicians around the world between 1990 and 2015. Evidence from staggered difference-in-differences and regression discontinuity in time models shows that in democracies attacks against politicians escalate before elections, whereas in autocracies bribes increase after elections. These findings align with a theoretical framework in which pressure groups use political violence to sway democratic elections in favor of their preferred candidates, while resorting to bribes to influence the behavior of newly appointed bureaucrats and public officials in autocracies. |
| Keywords: | Elections; Violence; Corruption |
| JEL: | K42 D72 |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:19416 |
| By: | Lagrotta, Luiz Carlos Nacif |
| Abstract: | Brazilian courts increasingly invoke administrative deference when reviewing technical, scientific, regulatory, distributive, and organizational decisions. Some judgments expressly associate this form of judicial restraint with the so-called Chevron doctrine, even though Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc. addressed a narrower question: whether courts should accept a permissible agency interpretation of an ambiguous statute. The United States Supreme Court’s decision in Loper Bright Enterprises v. Raimondo, which overruled Chevron, makes the conceptual ambiguity of the Brazilian approach particularly visible. This Article argues that Brazilian law has not imported a single doctrine of administrative deference. Instead, courts have placed several distinct forms of judicial restraint under the same label: interpretive, epistemic, regulatory, distributive, temporal-organizational, and institutional-procedural deference. These categories do not share the same legal foundation and should not be subject to the same standard of review. Deference cannot create administrative discretion, enlarge statutory authority, or convert technical complexity into immunity from judicial scrutiny. It operates only after the legal system has conferred a genuine margin of choice upon the administration. The Article proposes a density-sensitive model of deference. The intensity of judicial review should vary according to the statutory delegation, the nature of the disputed issue, the quality of the administrative procedure, the evidentiary basis of the decision, the completeness of its stated reasons, the severity of the rights restriction, and the comparative capacities of the institutions involved. Legal certainty, reasonableness, and proportionality are not exceptions to deference but conditions for its legitimacy. Law and Economics contributes by identifying information asymmetries, externalities, error costs, systemic effects, and institutional incentives, but efficiency cannot displace legality, equality, or fundamental rights. |
| Date: | 2026–08–10 |
| URL: | https://d.repec.org/n?u=RePEc:osf:lawarc:dq3rk_v1 |
| By: | Bingley, Paul (VIVE Copenhagen); Cappellari, Lorenzo (Università Cattolica del Sacro Cuore); Ovidi, Marco (Università Cattolica del Sacro Cuore); Sandi, Matteo (Università Cattolica del Sacro Cuore) |
| Abstract: | We provide the first causal evidence on the intergenerational effects of parental criminal victimization originating outside the family. Using population-wide Danish administrative data, we compare end-of-compulsory-school examination scores of children exposed to parental victimization with those of matched controls, and exploit victimizations occurring after compulsory schooling to account for residual selection. Violent, but not property, victimization lowers children’s mathematics scores by 0.03 standard deviations, rising to 0.05 standard deviations for exposure in early childhood, a period when parental inputs are especially consequential for skill formation. Deterioration in family stability, paternal behavior, and labor market attachment following victimization emerge as the primary mechanisms, pointing to an underappreciated channel of intergenerational inequality. |
| Keywords: | parental criminal victimization, intergenerational spillovers, children’s human capital, early childhood |
| JEL: | K42 I24 J13 |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18855 |
| By: | Asadi, Elnaz; Schaefer, K. Aleks; Rojas, Irvin |
| Abstract: | Due to phytosanitary requirements, the United States historically allowed avocado imports only from Michoacán. In August 2022, however, Jalisco was also authorized to export avocados to the United States, expanding export opportunities into a new region. This paper examines how economic shocks in legal sectors, such as the avocado industry, a ect cartel-related crime in Mexico. We focus on two dimensions of cartel behavior: the extensive margin, which refers to cartel entry into new regions or activities, and the intensive margin, which captures changes in the level of existing criminal activity. The results show no evidence that Jalisco's export authorization increased cartel entry or the reallocation of criminal activity across regions. However, higher avocado prices are associated with lower levels of extortion in avocado-producing municipalities and in Michoacán, the historically dominant exporting region. Overall, the results suggest that economic shocks a ect cartel violence mainly through changes in existing criminal activity rather than through expansion into new regions. |
| Keywords: | International Relations/Trade |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ags:aaea26:404667 |
| By: | Franco, Sofia; Koster, Hans |
| Abstract: | Drug-consumption rooms (DCRs), also known as supervised injection sites or safe injection rooms, provide a secure environment for the consumption of both legal and illegal drugs. The primary goals of DCRs are to enhance the health conditions of drug users and to reduce the public nuisance associated with drug use. Using detailed panel micro-data from the Netherlands, we find that DCRs reduce drug use in the surrounding neighborhoods by about 13 percentage points, equivalent to approximately three-quarters of a standard deviation. Additionally, drug-related crime is reduced by 24%. House prices increase by 2.5%, but this effect is observed only in low-income neighborhoods. These findings indicate that controlled drug use in DCRs can significantly enhance neighborhood quality, particularly in economically disadvantaged areas. |
| JEL: | I18 I31 H41 R30 R38 |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:19414 |
| By: | Juan Carlos Angulo (Department of Economics, Universidad Iberoamericana Ciudad de Mexico); Alejandra Villegas (Department of Economics, Universidad Iberoamericana Ciudad de Mexico); Ana Catala (Department of Economics, Universidad Iberoamericana Ciudad de Mexico) |
| Abstract: | Feminicide as a distinct type of crime is a relatively new phenomenon. Mexico's Gender Violence Alerts Against Women are among the country's most visible institutional response to tackle this type of crime. Using municipal-level administrative data for 2015-2025 and a staggered difference-in-differences/event-study design, this article estimates whether alert declarations are associated with changes in officially recorded feminicides. The annual full-sample estimate indicates a reduction of approximately 0.17 recorded feminicides per municipality-year, small in absolute terms but as large as 50% relative to baseline mean. To account for variation in officially recorded feminicides, we restrict our sample to municipalities with at least one recorded case and find a consistent and robust relationship between the alert declaration and the reduction of feminicides. We argue that alerts should be evaluated as emergency accountability mechanisms whose observed effects may reflect prevention, institutional coordination, reporting, classification, and public scrutiny. |
| JEL: | K19 J16 Z18 |
| Date: | 2026–08–14 |
| URL: | https://d.repec.org/n?u=RePEc:smx:wpaper:2026010 |
| By: | Beck, Thorsten; Levine, Ross |
| Abstract: | This chapter reviews the finance and law literature, which focuses on the role of legal institutions in shaping financial development. Considerable research finds that (1) in legal systems that enforce private property rights, support private contractual arrangements, and protect investors’ legal rights, savers are more willing to finance firms, and financial markets more efficiently allocate capital, and (2) the different legal traditions that emerged in Europe over previous centuries and were spread internationally through conquest, colonization, and imitation help explain cross-economy differences in investor protection, the contracting environment, and financial development. We discuss alternative explanations of financial development and weigh the evidence. |
| Keywords: | Legal institutions; Legal origins; Corporate finance; legal adaptability; Political structure |
| JEL: | G1 G2 G3 K2 |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:19387 |
| By: | Shujie Luan; Shubhranshu Singh; Tinglong Dai |
| Abstract: | A single clinical algorithm can deliver unequal accuracy across patient groups, and concern about such disparity has grown as artificial intelligence (AI) spreads through clinical decision-making. In response, a liability rule introduced in the United States holds healthcare providers responsible when their reliance on disparate algorithms contributes to erroneous clinical decisions. We examine how such liability considerations reshape (i) an AI firm's algorithm design decisions that drive group-specific accuracy and (ii) a physician's decisions to use AI in healthcare delivery. The AI firm designs an algorithm for two patient groups, and improving accuracy for the disadvantaged group is more costly. The physician (who remains the accountable decision-maker) then decides whether to consult AI, weighing the reduction in clinical uncertainty against expected liability exposure when AI errors disproportionately affect the disadvantaged group. We find the liability rule can induce disparate use of AI: the physician may reduce AI use overall and, over an intermediate range of liability, rely on AI less for disadvantaged patients. The effect is non-monotone. As liability increases, the physician's use of AI for disadvantaged patients first declines, then rises as the firm reallocates investment toward reducing disparity or switches to an equal-accuracy design. Mandating equal algorithmic accuracy across patient groups can then inadvertently harm both groups, because a uniform accuracy requirement distorts the firm's investment incentives and the physician's equilibrium AI-use decisions. |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2608.13618 |