This article examines the heterogeneous impact of state exemption laws and state garnishment laws on bankruptcy. Using a new household-level dataset, my empirical specification simultaneously examines the impact these laws have on a household’s bankruptcy decision as well as a household’s assets and unsecured debts. I find that high exemption laws have a positive impact on bankruptcy and that this effect is increasing in assets. Additionally, I find that high garnishment rates have a positive impact on bankruptcy, which is increasing in income. Moreover, I examine the policy implications of standardizing state exemption laws and state garnishments laws. Understanding the heterogeneous effects of these laws is crucial as they suggest that a household with a given set of financial characteristics will seek bankruptcy relief if it resides in one state but will have to use alternative consumption smoothing measures if it lives in a different state.
{"title":"Who Files for Bankruptcy? The Heterogeneous Impact of State Laws on a Household’s Bankruptcy Decision","authors":"Michelle M. Miller","doi":"10.1093/aler/ahz010","DOIUrl":"https://doi.org/10.1093/aler/ahz010","url":null,"abstract":"This article examines the heterogeneous impact of state exemption laws and state garnishment laws on bankruptcy. Using a new household-level dataset, my empirical specification simultaneously examines the impact these laws have on a household’s bankruptcy decision as well as a household’s assets and unsecured debts. I find that high exemption laws have a positive impact on bankruptcy and that this effect is increasing in assets. Additionally, I find that high garnishment rates have a positive impact on bankruptcy, which is increasing in income. Moreover, I examine the policy implications of standardizing state exemption laws and state garnishments laws. Understanding the heterogeneous effects of these laws is crucial as they suggest that a household with a given set of financial characteristics will seek bankruptcy relief if it resides in one state but will have to use alternative consumption smoothing measures if it lives in a different state.","PeriodicalId":46133,"journal":{"name":"American Law and Economics Review","volume":"1 1","pages":""},"PeriodicalIF":1.5,"publicationDate":"2019-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1093/aler/ahz010","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"60727427","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"社会学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Bias-Corrected Estimation of Price Impact in Securities Litigation","authors":"Taylor Dove,Davidson Heath,J B Heaton","doi":"10.1093/aler/ahz003","DOIUrl":"https://doi.org/10.1093/aler/ahz003","url":null,"abstract":"","PeriodicalId":46133,"journal":{"name":"American Law and Economics Review","volume":"50 7","pages":"184-208"},"PeriodicalIF":1.5,"publicationDate":"2019-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"138510070","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"社会学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper analyzes a contest in which defenders move first, have private information about the value of the objects they are trying to protect, and determine the observability of their defense efforts. The equilibrium consistent with the intuitive criterion depends on the distribution of defender types, the magnitude of the difference between defender types, and the asymmetry between defender and aggressor regarding the valuation of the objects at stake in the contest. Our setting captures key characteristics of the interaction between households and thieves, focusing on the classic distinction between observable and unobservable private precautions against crime. An analysis of welfare implications determines that a setting in which information about the value of the protected objects is private results in a better outcome than a complete-information scenario.
{"title":"Hide or Show? Observability of Private Precautions Against Crime When Property Value is Private Information","authors":"F. Baumann, Philipp Denter, Tim Friehe","doi":"10.1093/ALER/AHY009","DOIUrl":"https://doi.org/10.1093/ALER/AHY009","url":null,"abstract":"This paper analyzes a contest in which defenders move first, have private information about the value of the objects they are trying to protect, and determine the observability of their defense efforts. The equilibrium consistent with the intuitive criterion depends on the distribution of defender types, the magnitude of the difference between defender types, and the asymmetry between defender and aggressor regarding the valuation of the objects at stake in the contest. Our setting captures key characteristics of the interaction between households and thieves, focusing on the classic distinction between observable and unobservable private precautions against crime. An analysis of welfare implications determines that a setting in which information about the value of the protected objects is private results in a better outcome than a complete-information scenario.","PeriodicalId":46133,"journal":{"name":"American Law and Economics Review","volume":" ","pages":""},"PeriodicalIF":1.5,"publicationDate":"2018-11-29","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1093/ALER/AHY009","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"46425274","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"社会学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Safety in Police Numbers: Evidence of Police Effectiveness from Federal COPS Grant Applications","authors":"Emily K Weisburst","doi":"10.1093/aler/ahy010","DOIUrl":"https://doi.org/10.1093/aler/ahy010","url":null,"abstract":"","PeriodicalId":46133,"journal":{"name":"American Law and Economics Review","volume":"174 4 1","pages":"81-109"},"PeriodicalIF":1.5,"publicationDate":"2018-11-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"138528730","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"社会学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Statistical (and Racial) Discrimination, “Ban the Box”, and Crime Rates","authors":"Murat C. Mungan","doi":"10.1093/aler/ahy008","DOIUrl":"https://doi.org/10.1093/aler/ahy008","url":null,"abstract":"","PeriodicalId":46133,"journal":{"name":"American Law and Economics Review","volume":"1 1","pages":""},"PeriodicalIF":1.5,"publicationDate":"2018-10-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1093/aler/ahy008","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"44524274","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"社会学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This article explores the selection of disputes for litigation in a setting with two-sided incomplete information and correlated signals. The models analyzed here suggest that Priest and Klein’s conclusion that close cases are more likely to go to trial than extreme cases remains largely valid when their model is interpreted as involving correlated, two-sided incomplete information and is updated (i) to incorporate take-it-or-leave-it offers or the Chatterjee–Samuelson mechanism, (ii) to take into account the credibility of the plaintiff’s threat to go to trial, and (iii) to allow parties to make sophisticated, Bayesian inferences based on knowledge of the distribution of disputes. On the other hand, Priest and Klein’s prediction that the plaintiff will win 50% of litigated cases is sensitive to bargaining and parameter assumptions.
{"title":"Litigation and Selection with Correlated Two-Sided Incomplete Information","authors":"Daniel Klerman, Yoon-Ho Alex Lee, Lawrence Liu","doi":"10.1093/aler/ahy005","DOIUrl":"https://doi.org/10.1093/aler/ahy005","url":null,"abstract":"This article explores the selection of disputes for litigation in a setting with two-sided incomplete information and correlated signals. The models analyzed here suggest that Priest and Klein’s conclusion that close cases are more likely to go to trial than extreme cases remains largely valid when their model is interpreted as involving correlated, two-sided incomplete information and is updated (i) to incorporate take-it-or-leave-it offers or the Chatterjee–Samuelson mechanism, (ii) to take into account the credibility of the plaintiff’s threat to go to trial, and (iii) to allow parties to make sophisticated, Bayesian inferences based on knowledge of the distribution of disputes. On the other hand, Priest and Klein’s prediction that the plaintiff will win 50% of litigated cases is sensitive to bargaining and parameter assumptions.","PeriodicalId":46133,"journal":{"name":"American Law and Economics Review","volume":"43 1","pages":""},"PeriodicalIF":1.5,"publicationDate":"2018-10-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"138528755","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"社会学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Of the estimated 11.1 million undocumented immigrants in the United States, 1.1 million are children. Due to differential treatment in the labor market, teenage undocumented immigrants face low returns to schooling. To measure the effect of legal status on the educational choices of Hispanic teenagers, we compare siblings who differ in their legal status due to their birth country. We find that teenagers who were born in Mexico are 2.7 percentage points more likely to be out of school than their U.S.- born siblings. Alternative explanations, such as differences in prenatal or childhood environment, appear largely unable to explain this result, suggesting that legal status has a significant impact on schooling decisions. After accounting for these alternative explanations to the extent possible and using proxies for legal status in the U.S. Census, our results suggest that being undocumented roughly doubles high school students’ dropout rate relative to their U.S.-born siblings, with substantial wage decreases implied by back-of-the-envelope calculations.
{"title":"Does Legal Status Matter for Educational Choices? Evidence from Immigrant Teenagers","authors":"Zachary Liscow, William Gui Woolston","doi":"10.1093/aler/ahy006","DOIUrl":"https://doi.org/10.1093/aler/ahy006","url":null,"abstract":"Of the estimated 11.1 million undocumented immigrants in the United States, 1.1 million are children. Due to differential treatment in the labor market, teenage undocumented immigrants face low returns to schooling. To measure the effect of legal status on the educational choices of Hispanic teenagers, we compare siblings who differ in their legal status due to their birth country. We find that teenagers who were born in Mexico are 2.7 percentage points more likely to be out of school than their U.S.- born siblings. Alternative explanations, such as differences in prenatal or childhood environment, appear largely unable to explain this result, suggesting that legal status has a significant impact on schooling decisions. After accounting for these alternative explanations to the extent possible and using proxies for legal status in the U.S. Census, our results suggest that being undocumented roughly doubles high school students’ dropout rate relative to their U.S.-born siblings, with substantial wage decreases implied by back-of-the-envelope calculations.","PeriodicalId":46133,"journal":{"name":"American Law and Economics Review","volume":"5 1","pages":""},"PeriodicalIF":1.5,"publicationDate":"2018-09-21","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"138528735","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"社会学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Despite the vast sums transferred through the legal system, the foundations of the procedures used to compensate plaintiffs for unobservable losses remain unclear. Standard remedies can compensate plaintiffs for unknown harms, but it is expensive to do so. Damage awards will generally undercompensate or overcompensate a plaintiff whose true harm is unknown, while equitable remedies that provide more tailored compensation are generally wasteful. In this article I develop a novel remedy that compensates plaintiffs for unobservable private values at the lowest possible cost to the defendant. This remedy consists of offering the plaintiff the choice between intermediate damages and an inalienable injunction that restores the underlying harm at the conclusion of the trial. I show that this remedy is robust to errors by the court and potential post judgment renegotiation. Furthermore, I demonstrate that this remedy reduces litigants’ incentives to lie during trial. Finally, I consider ex ante deterrence and show conditions under which the remedy improves social welfare relative to optimal damages.
{"title":"Designing Remedies to Compensate Plaintiffs for Unobservable Harms","authors":"Nathan Atkinson","doi":"10.1093/aler/ahy007","DOIUrl":"https://doi.org/10.1093/aler/ahy007","url":null,"abstract":"Despite the vast sums transferred through the legal system, the foundations of the procedures used to compensate plaintiffs for unobservable losses remain unclear. Standard remedies can compensate plaintiffs for unknown harms, but it is expensive to do so. Damage awards will generally undercompensate or overcompensate a plaintiff whose true harm is unknown, while equitable remedies that provide more tailored compensation are generally wasteful. In this article I develop a novel remedy that compensates plaintiffs for unobservable private values at the lowest possible cost to the defendant. This remedy consists of offering the plaintiff the choice between intermediate damages and an inalienable injunction that restores the underlying harm at the conclusion of the trial. I show that this remedy is robust to errors by the court and potential post judgment renegotiation. Furthermore, I demonstrate that this remedy reduces litigants’ incentives to lie during trial. Finally, I consider ex ante deterrence and show conditions under which the remedy improves social welfare relative to optimal damages.","PeriodicalId":46133,"journal":{"name":"American Law and Economics Review","volume":"16 10 1","pages":""},"PeriodicalIF":1.5,"publicationDate":"2018-09-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"138528742","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"社会学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"The Rationale for Motions in the Design of Adjudication","authors":"Steven Shavell","doi":"10.1093/aler/ahy004","DOIUrl":"https://doi.org/10.1093/aler/ahy004","url":null,"abstract":"","PeriodicalId":46133,"journal":{"name":"American Law and Economics Review","volume":"8 1","pages":""},"PeriodicalIF":1.5,"publicationDate":"2018-08-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"138528731","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"社会学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Litigation is costly because information is not free. Given that information is costly and perfect information prohibitively costly, courts will occasionally err. Finally, the fact that information is costly implies an unavoidable degree of informational asymmetry between disputants. This paper presents a model of the civil justice system that incorporates these features and probes its implications for compliance with the law, efficiency of law, accuracy in adjudication, trial outcome statistics, and the evolution of legal standards. The model’s claims are applied to and tested against the relevant empirical and legal literature.
{"title":"Information Costs and the Civil Justice System","authors":"Keith N. Hylton","doi":"10.2139/SSRN.3223581","DOIUrl":"https://doi.org/10.2139/SSRN.3223581","url":null,"abstract":"\u0000 Litigation is costly because information is not free. Given that information is costly and perfect information prohibitively costly, courts will occasionally err. Finally, the fact that information is costly implies an unavoidable degree of informational asymmetry between disputants. This paper presents a model of the civil justice system that incorporates these features and probes its implications for compliance with the law, efficiency of law, accuracy in adjudication, trial outcome statistics, and the evolution of legal standards. The model’s claims are applied to and tested against the relevant empirical and legal literature.","PeriodicalId":46133,"journal":{"name":"American Law and Economics Review","volume":" ","pages":""},"PeriodicalIF":1.5,"publicationDate":"2018-07-31","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"47984103","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"社会学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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