This article studies the internal politics of a licensing association with regard to expansion of the licensure and self-regulation. A theoretical model is presented of a professional association that has the power to restrict entry, and yet a majority of its members may prefer to allow entry, even when doing so reduces the total revenue of its members. This may happen due to a conflict of interest among professional sub-specialties. On the other hand, the model predicts no heterogeneity of interests within the association regarding self-regulation. (JEL J44)
{"title":"The Political Economy of Occupational Licensing Associations","authors":"N. Persico","doi":"10.1093/JLEO/EWU011","DOIUrl":"https://doi.org/10.1093/JLEO/EWU011","url":null,"abstract":"This article studies the internal politics of a licensing association with regard to expansion of the licensure and self-regulation. A theoretical model is presented of a professional association that has the power to restrict entry, and yet a majority of its members may prefer to allow entry, even when doing so reduces the total revenue of its members. This may happen due to a conflict of interest among professional sub-specialties. On the other hand, the model predicts no heterogeneity of interests within the association regarding self-regulation. (JEL J44)","PeriodicalId":47987,"journal":{"name":"Journal of Law Economics & Organization","volume":"235 1","pages":"213-241"},"PeriodicalIF":1.1,"publicationDate":"2015-05-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"76758418","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}
Empirical evidence on the effect of pay-for-performance on output has been scarce. We propose that worker responses to marginal pay-for-performance changes can be related to their response to a measure of taxes. Using this approach, we suggest a short-run elasticity of output with respect to incentive pay for high earners in the United States of 0.25 or lower, and it is difficult to rule out very low responsiveness. (JEL J33, H24)
{"title":"The Empirical Content of Pay-for-Performance","authors":"Canice Prendergast","doi":"10.1093/JLEO/EWU014","DOIUrl":"https://doi.org/10.1093/JLEO/EWU014","url":null,"abstract":"Empirical evidence on the effect of pay-for-performance on output has been scarce. We propose that worker responses to marginal pay-for-performance changes can be related to their response to a measure of taxes. Using this approach, we suggest a short-run elasticity of output with respect to incentive pay for high earners in the United States of 0.25 or lower, and it is difficult to rule out very low responsiveness. (JEL J33, H24)","PeriodicalId":47987,"journal":{"name":"Journal of Law Economics & Organization","volume":"1139 ","pages":"242-261"},"PeriodicalIF":1.1,"publicationDate":"2015-05-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1093/JLEO/EWU014","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"72433534","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 study analyzes deterrence schemes and their impact on stealing. The results confirm Becker’s deterrence hypothesis. Moreover, crowding out of pro-social behavior occurs due to deterrence incentives: when deterrence incentives first exist and are removed later on, subsequent behavior is more selfish than without this deterrence history. This study offers evidence that (part of this) crowding out takes place via change of emotions. Without deterrence incentives in place, in a variant of the dictator game, players with pro-social emotions steal less. When players face expected punishment, pro-social emotions are deactivated and do not decrease stealing; in this case, self-centered emotions get activated and motivate greater stealing. This study provides support for theories on emotions in behavioral criminal law and economics and offers new insights for deterrence policy. (JEL C91, D63, K42)
{"title":"On the Interaction of Deterrence and Emotions","authors":"Menusch Khadjavi","doi":"10.1093/JLEO/EWU012","DOIUrl":"https://doi.org/10.1093/JLEO/EWU012","url":null,"abstract":"This study analyzes deterrence schemes and their impact on stealing. The results confirm Becker’s deterrence hypothesis. Moreover, crowding out of pro-social behavior occurs due to deterrence incentives: when deterrence incentives first exist and are removed later on, subsequent behavior is more selfish than without this deterrence history. This study offers evidence that (part of this) crowding out takes place via change of emotions. Without deterrence incentives in place, in a variant of the dictator game, players with pro-social emotions steal less. When players face expected punishment, pro-social emotions are deactivated and do not decrease stealing; in this case, self-centered emotions get activated and motivate greater stealing. This study provides support for theories on emotions in behavioral criminal law and economics and offers new insights for deterrence policy. (JEL C91, D63, K42)","PeriodicalId":47987,"journal":{"name":"Journal of Law Economics & Organization","volume":"35 1","pages":"287-319"},"PeriodicalIF":1.1,"publicationDate":"2015-05-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"75688810","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 provides an experimental investigation of third parties’ sanctioning behavior, in order to understand whether public officials (e.g., judges, politicians, or regulators), when deciding about top-down interventions aimed at punishing wrongdoers, are sensitive to bottom-up pressure on the part of ordinary citizens, who are the major victims of wrongdoers’ behavior. We set up a novel five-treatment design and compare situations where a wrongdoer acts under: (1) no third-party punishment; (2) nonaccountable third-party punishment; and (3) accountable third-party punishment. We show that when citizens are active and make their voice heard, public officials sanction wrongdoing significantly more. Our experimental finding complements previous empirical work based on field data and suggests that when third-party institutions are held accountable, their propensity to fight misconduct is higher, other things equal. We view this result as good news with regard to domains where it implies that pro-consumer policies will be more likely (e.g., regulatory policies). The risk of pandering by elected officials and the danger of poorly informed decisions by the citizens are the flip side of the argument. (JEL C91, D02, D63, D72, K00)
{"title":"Power to the People? An Experimental Analysis of Bottom-Up Accountability of Third-Party Institutions","authors":"Stefania Ottone, Ferruccio Ponzano, L. Zarri","doi":"10.1093/JLEO/EWU007","DOIUrl":"https://doi.org/10.1093/JLEO/EWU007","url":null,"abstract":"This article provides an experimental investigation of third parties’ sanctioning behavior, in order to understand whether public officials (e.g., judges, politicians, or regulators), when deciding about top-down interventions aimed at punishing wrongdoers, are sensitive to bottom-up pressure on the part of ordinary citizens, who are the major victims of wrongdoers’ behavior. We set up a novel five-treatment design and compare situations where a wrongdoer acts under: (1) no third-party punishment; (2) nonaccountable third-party punishment; and (3) accountable third-party punishment. We show that when citizens are active and make their voice heard, public officials sanction wrongdoing significantly more. Our experimental finding complements previous empirical work based on field data and suggests that when third-party institutions are held accountable, their propensity to fight misconduct is higher, other things equal. We view this result as good news with regard to domains where it implies that pro-consumer policies will be more likely (e.g., regulatory policies). The risk of pandering by elected officials and the danger of poorly informed decisions by the citizens are the flip side of the argument. (JEL C91, D02, D63, D72, K00)","PeriodicalId":47987,"journal":{"name":"Journal of Law Economics & Organization","volume":"42 1","pages":"347-382"},"PeriodicalIF":1.1,"publicationDate":"2015-05-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"74090833","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 investigates a repeated employment relationship between a principal and a team of agents hired to solve a series of problems. With non-verifiable output, rewarding agents based on team performance can relax the principal’s credibility constraint by smoothing bonus payments over time. Team incentives also induce free-riding, but the principal prefers them to individual incentives if effort costs are relatively high and problems difficult to solve. We show that a simple mixture of an individual and team bonus constitutes the optimal relational contract under joint performance evaluation. The optimal contract may be inefficient when team size is endogenous, as rewarding team performance forces the principal to share surplus with agents, but may allow him to motivate a larger group. (JEL L14, M52).
{"title":"Team-Based Incentives in Problem-Solving Organizations","authors":"Jin‐Hyuk Kim, Nick Vikander","doi":"10.1093/JLEO/EWT017","DOIUrl":"https://doi.org/10.1093/JLEO/EWT017","url":null,"abstract":"This article investigates a repeated employment relationship between a principal and a team of agents hired to solve a series of problems. With non-verifiable output, rewarding agents based on team performance can relax the principal’s credibility constraint by smoothing bonus payments over time. Team incentives also induce free-riding, but the principal prefers them to individual incentives if effort costs are relatively high and problems difficult to solve. We show that a simple mixture of an individual and team bonus constitutes the optimal relational contract under joint performance evaluation. The optimal contract may be inefficient when team size is endogenous, as rewarding team performance forces the principal to share surplus with agents, but may allow him to motivate a larger group. (JEL L14, M52).","PeriodicalId":47987,"journal":{"name":"Journal of Law Economics & Organization","volume":"44 1","pages":"262-286"},"PeriodicalIF":1.1,"publicationDate":"2015-05-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"80778136","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}
Using civil appeals data on Taiwan’s Supreme Court (TSC), this article revisits the well-known question of whether the "haves" come out ahead in litigations. We first show that the higher-status litigants indeed mobilized stronger legal representation and obtained more victories than the lower-status litigants. However, we submit that that the party capability theory cannot fully explain the advantages the "haves" enjoyed over the "have-nots." Further analysis reveals that the TSC’s exercise of discretionary jurisdiction also played an important role by strongly favoring the governmental litigants at the agenda-setting stage. We argue that the TSC’s preference in this regard was induced by the TSC judges’ self-identification as part of government. In conclusion, our empirical investigation shows that both party capability and court preference contribute to influence the outcomes of appeals. (JEL K4)
{"title":"Party Capability versus Court Preference: Why Do the “Haves” Come Out Ahead?—An Empirical Lesson from the Taiwan Supreme Court","authors":"Kong‐Pin Chen, Kuo‐Chang Huang, C. Lin","doi":"10.1093/JLEO/EWT022","DOIUrl":"https://doi.org/10.1093/JLEO/EWT022","url":null,"abstract":"Using civil appeals data on Taiwan’s Supreme Court (TSC), this article revisits the well-known question of whether the \"haves\" come out ahead in litigations. We first show that the higher-status litigants indeed mobilized stronger legal representation and obtained more victories than the lower-status litigants. However, we submit that that the party capability theory cannot fully explain the advantages the \"haves\" enjoyed over the \"have-nots.\" Further analysis reveals that the TSC’s exercise of discretionary jurisdiction also played an important role by strongly favoring the governmental litigants at the agenda-setting stage. We argue that the TSC’s preference in this regard was induced by the TSC judges’ self-identification as part of government. In conclusion, our empirical investigation shows that both party capability and court preference contribute to influence the outcomes of appeals. (JEL K4)","PeriodicalId":47987,"journal":{"name":"Journal of Law Economics & Organization","volume":"51 1","pages":"93-126"},"PeriodicalIF":1.1,"publicationDate":"2015-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"74938232","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 studies whether producers’ up-front investments can help sustain relations with business partners. The initial investment combined with the business partner’s threat to terminate the contract before it expires can generate a bonding mechanism that precludes the producer from behaving opportunistically. I test this view using franchise contract data and a natural experiment. In practice, the franchisor (business partner) determines how much a franchisee (producer) needs to invest up-front. I show that franchisors affected by the passing of a law that restricts their ability to terminate misbehaving franchisees ask their franchisees for higher up-front investments. This result is particularly large for small franchise systems, as franchisees’ investments are less redeployable in case of contract termination. The data suggest that contractual up-front investments can be used to sustain business relations (JEL L14, K20, M21).
{"title":"Bonding Through Investments: Evidence from Franchising","authors":"Giorgo Sertsios","doi":"10.2139/SSRN.1651322","DOIUrl":"https://doi.org/10.2139/SSRN.1651322","url":null,"abstract":"This article studies whether producers’ up-front investments can help sustain relations with business partners. The initial investment combined with the business partner’s threat to terminate the contract before it expires can generate a bonding mechanism that precludes the producer from behaving opportunistically. I test this view using franchise contract data and a natural experiment. In practice, the franchisor (business partner) determines how much a franchisee (producer) needs to invest up-front. I show that franchisors affected by the passing of a law that restricts their ability to terminate misbehaving franchisees ask their franchisees for higher up-front investments. This result is particularly large for small franchise systems, as franchisees’ investments are less redeployable in case of contract termination. The data suggest that contractual up-front investments can be used to sustain business relations (JEL L14, K20, M21).","PeriodicalId":47987,"journal":{"name":"Journal of Law Economics & Organization","volume":"1 1","pages":"187-212"},"PeriodicalIF":1.1,"publicationDate":"2015-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"79999543","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}
Beginning with Serrano v. Priest in 1971, equity-based decisions issued by state supreme courts led to a decrease in cross-district inequality in per pupil expenditures. In subsequent years, more state supreme courts overturned existing systems of public school finance for failing to provide adequate education to students living in poor school districts. Adequacy-based decisions have not produced measurable changes in cross-district inequality in expenditures, but have led to higher overall levels of funding for public education. The nationwide increase in per pupil expenditures over the past several decades is, however, largely the product of growth in personal incomes and a decline in the relative size of the cohort of school-age children, and not of court-ordered finance reforms. In California, after Serrano and the most far-reaching equalization reforms implemented anywhere in the country, the association between the wealth of a school district and educational quality remains strong and persistent. If one’s concern is the quality of education that students receive and not the amount of money spent on them, the victories that reformers have won in the courts have been hollow victories. (JEL I210, I220, I240).
{"title":"The Impact of State Supreme Court Decisions on Public School Finance","authors":"S. Hill, D. Kiewiet","doi":"10.1093/JLEO/EWU001","DOIUrl":"https://doi.org/10.1093/JLEO/EWU001","url":null,"abstract":"Beginning with Serrano v. Priest in 1971, equity-based decisions issued by state supreme courts led to a decrease in cross-district inequality in per pupil expenditures. In subsequent years, more state supreme courts overturned existing systems of public school finance for failing to provide adequate education to students living in poor school districts. Adequacy-based decisions have not produced measurable changes in cross-district inequality in expenditures, but have led to higher overall levels of funding for public education. The nationwide increase in per pupil expenditures over the past several decades is, however, largely the product of growth in personal incomes and a decline in the relative size of the cohort of school-age children, and not of court-ordered finance reforms. In California, after Serrano and the most far-reaching equalization reforms implemented anywhere in the country, the association between the wealth of a school district and educational quality remains strong and persistent. If one’s concern is the quality of education that students receive and not the amount of money spent on them, the victories that reformers have won in the courts have been hollow victories. (JEL I210, I220, I240).","PeriodicalId":47987,"journal":{"name":"Journal of Law Economics & Organization","volume":"1 1","pages":"61-92"},"PeriodicalIF":1.1,"publicationDate":"2015-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"88254009","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}
Using unique establishment-level data, we find that delegation of organizational change is more likely in workplaces that: face a competitive product market, export, have predictable demand, are part of a smaller overall organization, and have fewer workplaces in the firm producing the same output. Surprisingly, we find no significant relationship between import competition and the allocation of decision-making rights within a firm. Our results are robust to a range of specifications and to alternative measures of our key explanatory variables. (JEL D23, L23, L29).
{"title":"Delegation of Decisions About Change in Organizations: The Roles of Competition, Trade, Uncertainty, and Scale","authors":"Kieron J. Meagher, A. Wait","doi":"10.1093/JLEO/EWT011","DOIUrl":"https://doi.org/10.1093/JLEO/EWT011","url":null,"abstract":"Using unique establishment-level data, we find that delegation of organizational change is more likely in workplaces that: face a competitive product market, export, have predictable demand, are part of a smaller overall organization, and have fewer workplaces in the firm producing the same output. Surprisingly, we find no significant relationship between import competition and the allocation of decision-making rights within a firm. Our results are robust to a range of specifications and to alternative measures of our key explanatory variables. (JEL D23, L23, L29).","PeriodicalId":47987,"journal":{"name":"Journal of Law Economics & Organization","volume":"45 1","pages":"709-733"},"PeriodicalIF":1.1,"publicationDate":"2014-11-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"87884531","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 examines the properties of the two most commonly used legal institutions: the inquisitorial system and the adversarial system. In the former system, the judge makes a decision based on her own acquired information, whereas in the latter system, the advocates are required to present their acquired information to the uninformed judge. Within the binary decision framework, I study the circumstances in which one system is superior to the other in terms of accuracy. The following two effects are notable in the adversarial system: The advocates exert more effort regarding information acquisition than the judge, and the adversarial judge gleans additional information from non-disclosure events. However, one inherent weakness of the adversarial system is its communication problem. In cases in which such a problem is more pronounced, the inquisitorial system should prevail despite its lack of incentives for information collection. (JEL D74, D82, D83, K41)
{"title":"Adversarial and Inquisitorial Procedures with Information Acquisition","authors":"Chulyoung Kim","doi":"10.1093/JLEO/EWT012","DOIUrl":"https://doi.org/10.1093/JLEO/EWT012","url":null,"abstract":"This article examines the properties of the two most commonly used legal institutions: the inquisitorial system and the adversarial system. In the former system, the judge makes a decision based on her own acquired information, whereas in the latter system, the advocates are required to present their acquired information to the uninformed judge. Within the binary decision framework, I study the circumstances in which one system is superior to the other in terms of accuracy. The following two effects are notable in the adversarial system: The advocates exert more effort regarding information acquisition than the judge, and the adversarial judge gleans additional information from non-disclosure events. However, one inherent weakness of the adversarial system is its communication problem. In cases in which such a problem is more pronounced, the inquisitorial system should prevail despite its lack of incentives for information collection. (JEL D74, D82, D83, K41)","PeriodicalId":47987,"journal":{"name":"Journal of Law Economics & Organization","volume":"144 1","pages":"767-803"},"PeriodicalIF":1.1,"publicationDate":"2014-11-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"74250511","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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