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Lay juries and professional arbitrators and the arbitrator selection hypothesis  PDF FILE


An empirical study of jury and court-annexed arbitration trials is undertaken. The determinants of jury and arbitrator awards are discovered. The research provides insight into a number of controversies, including the differences between professional judges and lay juries, the theory of arbitrator selection, and the issue of "deep pockets."

Contests where there is variation in the marginal productivity of effort  PDF FILE
    (co-authored with N. Singh) ABSTRACT

We provide a characterization of participants' behavior in a contest or tournament where the marginal productivity of effort varies across contestants and individual productivity is private information. We then consider the optimal design of such a contest.

We first analyze contestant behavior for the usual type of contest, where the highest output wins. Abilities need not be independently distributed. We demonstrate that there is a unique symmetric equilibrium output function and that output is increasing in ability. We also show that marginal effort is increasing in ability and that effort decreases when the cost of effort increases.

Next we consider the case where the highest output need not win; however, abilities are now assumed to be independently distributed. We analyze the contest designer's decisions in choosing contest rules optimal from her point of view. We characterize the solution in terms of continuity and exclusion of low ability participants. We also show that under the conditions imposed, the output produced and probability of winning are increasing in ability (whenever this probability is between zero and one). We also examine when the equilibrium probability of winning can be zero or one, and the relationship between the marginal cost of producing output and the marginal utility per dollar of the net award for winning. Finally, we show that the contest designer's expected revenue is increasing in the ability of contestants.

Implementation with partial verification PDF FILE (Co-authored with N. Singh) ABSTRACT

This paper examines the implementability of social choice functionswhen only partial verification of private information is possible. Partial verification occurs when agents of different types may have different message correspondences. Green and Laffont (1986) used this framework to derive a necessary and sufficient condition - the Nested Range Condition (NRC) - for the revelation principle to continue to hold with partial verification. We provide some economically interesting characterizations of NRC, which also suggest that it may be too restrictive. This leads us to consider the general issue of implementation (not necessarily truthful) when there is partial verification. Partial verification substitute for differences in preferences, which must be relied on in the standard approach. We also consider the case where compensatory transfers are allowed; this gives the mechanism designer further leeway. Finally, we show how partial verification may allow efficient implementation of bilateral trade, where it would otherwise not be possible.

Rational voters and political advertising  PDF FILE ABSTRACT:

Economic and political science journals are filled with models of interest group politics. Their details may differ, but the message is the same: politicians tradeoff good policy in return for campaign contributions from special interests. I show that these models implicitly assume irrational behavior. If voters have rational expectations or employ sensible rules of thumb, then campaign contributions move the outcome toward the median voter. If the contributions are not welfare improving for the median voter, then voters will respond negatively to such advertising, and contributions will not be made in the first place.

Candidate quality, pressure group endorsements, and uninformed voters PDF FILE


Candidates may vary in quality, where quality is some characteristic orthogonal to policy. This "simple modification" has for the most part defied integration into the Downsian framework. Here we add the following complicating factors. We consider the possibility that there are uninformed voters who are ignorant of both the candidates' positions and their quality. However, a pressure group with inside information regarding the quality of the candidates may endorse one of the candidates as the high-quality candidate. We assume that the uninformed voters behave rationally in the presence of this endorsement. Contrary to the literature, we show that campaign endorsements by the pressure group are generally welfare improving even though the pressure group takes advantage of its private information. We present a number of models, all tied together by the maximin solution concept.

Psychological advice and the internal organization of the family  PDF FILE
  This article employs a law and economics approach to understanding the organization of family behavior.

Present day psychological advice regarding social relations is shown to use the same conceptual apparatus as economics: rationality, choice, equilibrium, property rights, competition, fixity of preferences, self interest and the invisible hand. Therapeutic advice for behavior within the family is to create a functioning property rights system and to emulate voluntary transactions within a competitive economic market. The optimal organization of the family requires that relations are structured so that non-cooperative game playing is minimized and transaction costs are reduced.

The wealth and size of nations  PDF FILE

This paper provides a general theory explaining the geographic and population size and wealth of nations. Successful countries create conditions for high productivity in the economic sphere by enforcing property rights and providing social overhead capital and at the same time minimize political costs by creating a system of rules that reduces influence costs and allows for diverse preferences. Countries also need an effective military apparatus to protect their wealth from predation by other countries. Success in these endeavors may lead to immigration and geographical expansion, while an inability to meet these goals may lead to extensive emigration or breakup of the country. The argument is done within the context of a formal model that integrates spatial political costs with the benefits of spatially determined economic production and the effect of coercive transfers. The analysis is used to provide insight into secessions and mergers of nation states. Several historical events are covered.

JEL#: D, D7, F2


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