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Law and Economics

Selected Works

Aaron Edlin

Articles 1 - 7 of 7

Full-Text Articles in Law

Stereotypes And Affirmative Action In Higher Education Admissions, Prasad Krishnamurthy, Aaron Edlin Oct 2017

Stereotypes And Affirmative Action In Higher Education Admissions, Prasad Krishnamurthy, Aaron Edlin

Aaron Edlin

No abstract provided.

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Conservatism And Switcher's Curse, Aaron Edlin Dec 2016

Conservatism And Switcher's Curse, Aaron Edlin

Aaron Edlin

This paper formally models the virtues of Edmund Burke's conservatism, characterizes the optimal level of conservatism, and applies the model to management, law, and policy.  I begin by introducing ``switcher's curse,'' a trap in which a decision maker systematically switches too often. Decision makers suffer from switcher's curse if they forget the reason that they maintained incumbent policies in the past and if they naively compare rival and incumbent policies with no bias for incumbent policies.   Conservatism emerges as a heuristic to avoid switcher's curse. The longer a process or policy has been in place, the more conservative one …

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Predatory Pricing, Aaron S. Edlin Dec 2011

Predatory Pricing, Aaron S. Edlin

Aaron Edlin

Judge Breyer famously worried that aggressive prohibitions of predatory pricing throw away a bird in hand (low prices during the alleged predatory period) for a speculative bird in the bush (preventing higher prices thereafter). Here, I argue that there is no bird in hand because entry cannot be presumed. Moreover, it is plausibly commonplace that low prices or the threat of low prices produce anticompetitive results by reducing entry, inducing exit, and keeping prices high. I analyze three potential standards for identifying predatory pricing. Two are traditional but have been tangled together and must be distinguished. First, a price-cost test …

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Chapter 1: The Importance Of Law In Promoting Innovation And Growth, Robert D. Cooter, Aaron Edlin, Robert Litan, George Priest Dec 2010

Chapter 1: The Importance Of Law In Promoting Innovation And Growth, Robert D. Cooter, Aaron Edlin, Robert Litan, George Priest

Aaron Edlin

No abstract provided.

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What Is The Probability Your Vote Will Make A Difference?, Andrew Gelman, Nate Silver, Aaron S. Edlin Dec 2008

What Is The Probability Your Vote Will Make A Difference?, Andrew Gelman, Nate Silver, Aaron S. Edlin

Aaron Edlin

One of the reasonable motivations for voting is that one vote can make a difference, as Edlin, Gelman, and Kaplan [2007] showed. In a presidential election, the probability that your vote is decisive is equal to the probability that your state is necessary for an electoral college win, times the probability the vote in your state is tied in that event. We computed these probabilities a week before the 2008 presidential election, using state-by-state election forecasts based on the latest polls. The states where a single vote was most likely to matter are New Mexico, Virginia, New Hampshire, and Colorado, …

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The Accident Externality From Driving, Aaron S. Edlin, Pinar Karaca Mandic Sep 2006

The Accident Externality From Driving, Aaron S. Edlin, Pinar Karaca Mandic

Aaron Edlin

We estimate auto accident externalities (more specifically insurance externalities) using panel data on state-average insurance premiums and loss costs. Externalities appear to be substantial in traffic-dense states: in California, for example, we find that the increase in traffic density from a typical additional driver increases total state wide in-surance costs of other drivers by $1,725–$3,239 per year, depending on the model. High–traffic density states have large economically and statistically significant externalities in all specifications we check. In contrast, the accident externality per driver in low-traffic states appears quite small. On balance, accident externalities are so large that a correcting Pigouvian …

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Contract Renegotiation And Options In Agency Problems, Aaron S. Edlin, Benjamin E. Hermalin Sep 2000

Contract Renegotiation And Options In Agency Problems, Aaron S. Edlin, Benjamin E. Hermalin

Aaron Edlin

This article discusses the ability of an agent and a principal to achieve the first-best outcome when the agent invests in an asset that has greater value if owned by the principal than by the agent. When contracts can be renegotiated, a well-known danger is that the principal can hold up the agent, undermining the agent's investment incentives. We begin by identifying a countervailing effect: Investment by the agent can increase his value for the asset, thus improving his bargaining position in renegotiation. We show that option contracts will achieve the first best whenever his threat-point effect dominates the holdup …

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