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Full-Text Articles in Social and Behavioral Sciences
Strategic Implications Of Uncertainty Over One's Own Private Value In Auctions, Eric Bennett Rasmusen
Strategic Implications Of Uncertainty Over One's Own Private Value In Auctions, Eric Bennett Rasmusen
Eric Bennett Rasmusen
Bidders have to decide whether and when to incur the cost of estimating their own values in auctions. This can explain sniping-- flurries of bids late in auctions with deadlines-- as the result of bidders trying to avoid stimulating other bidders into examining their bid ceiling more carefully.
The Case For Managed Judges: Learning From Japan After The Political Upheaval Of 1993, Eric Bennett Rasmusen, J. Mark Ramseyer
The Case For Managed Judges: Learning From Japan After The Political Upheaval Of 1993, Eric Bennett Rasmusen, J. Mark Ramseyer
Eric Bennett Rasmusen
Although the executive branch appoints Japanese Supreme Court justices as it does in the United States, a personnel office under the control of the Supreme Court rotates lower court Japanese judges through a variety of posts. This creates the possibility that politicians might indirectly use the postings to reward or punish judges. For forty years, the Liberal Democratic Party (LDP) controlled the legislature and appointed the Supreme Court justices who in turn controlled the careers of these lower-court judges. In 1993, it temporarily lost control. We use regression analysis to examine whether the end of the LDP's electoral lock changed …
The Economics Of Agency Law And Contract Formation, Eric Bennett Rasmusen
The Economics Of Agency Law And Contract Formation, Eric Bennett Rasmusen
Eric Bennett Rasmusen
This article uses the economic approach to address issues that arise in agency law when agents make contracts on behalf of principals. The main issue is whether the principal should be bound when the agent makes a contract with some third party on his behalf which the principal would immediately wish to disavow. The resulting tradeoffs resemble those in tort law, so the least-cost-avoider principle is useful for deciding when contracts are valid and may be the underlying logic behind a number of different legal doctrines applied to agency cases. In particular, an efficiency explanation can be found for the …
Buyer-Option Contracts, Renegotiation, And The Hold-Up Problem, Eric Bennett Rasmusen, Thomas P. Lyon
Buyer-Option Contracts, Renegotiation, And The Hold-Up Problem, Eric Bennett Rasmusen, Thomas P. Lyon
Eric Bennett Rasmusen
Hart & Moore (1999) construct a model to show that contracts perform poorly when the state of the world is unverifiable and renegotiation cannot be ruled out. They implicitly assume that one player can extort payment from another by threatening to take an inefficient action which hurts both of them. Without this assumption, a simple ``buyer option" contract can implement the first-best even as complexity becomes severe. The model is a good illustration of the need to be careful with the ideas of ``one party has all the bargaining power'' and ``one party can make a take-it-or-leave-it offer.''
Bertrand Competition Under Uncertainty, Eric Bennett Rasmusen, Maarten Janssen
Bertrand Competition Under Uncertainty, Eric Bennett Rasmusen, Maarten Janssen
Eric Bennett Rasmusen
Consider a Bertrand model in which each firm may be inactive with a known probability, so the number of active firms is uncertain. This simple model has a mixed-strategy equilibrium in which industry profits are positive and decline with the number of firms, the same features which make the Cournot model attractive. Unlike in a Cournot model with similar incomplete information, Bertrand profits always increase in the probability other firms are inactive. Profits do decline more sharply than in the Cournot model, and the pattern is similar to that found by Bresnahan & Reiss (1991).
An Economic Approach To Adultery Law, Eric Bennett Rasmusen
An Economic Approach To Adultery Law, Eric Bennett Rasmusen
Eric Bennett Rasmusen
A long- term relationship such as marriage will not operate efficiently without sanctions for misconduct, of which adultery is one example. Traditional legal sanctions can be seen as different combinations of various features, differing in who initiates punishment, whether punishment is just a transfer or has real costs, who gets the transfer or pays the costs, whether the penalty is determined ex ante or ex post, whether spousal rights are alienable, and who is punished. Three typical sanctions, criminal penalties for adultery, the tort of alienation of affections, and the self-help remedy of justification are formally modelled. The penalties are …
Can High Prices Ensure Product Quality When Buyers Do Not Know The Sellers' Cost?, Eric Bennett Rasmusen, Timothy Perri
Can High Prices Ensure Product Quality When Buyers Do Not Know The Sellers' Cost?, Eric Bennett Rasmusen, Timothy Perri
Eric Bennett Rasmusen
The Klein-Leffler (1981) model of product quality does not explain why high-quality firms would dissipate the rents they earn from quality- assuring price premia, and it relies on consumers knowing the cost functions of firms. In the present paper, consumers do not know any firm's cost of producing quality goods, so high- quality firms must engage in conspicuous spending to demonstrate they earn a profitable mark-up over cost. Complete rent dissipation occurs only when high and low cost firms have the same cost of producing low quality.
Why Are Japanese Judges So Conservative In Politically Charged Cases?, Eric Bennett Rasmusen, J. Mark Ramseyer
Why Are Japanese Judges So Conservative In Politically Charged Cases?, Eric Bennett Rasmusen, J. Mark Ramseyer
Eric Bennett Rasmusen
In politically charged cases, Japanese judges routinely implement the policy preferences of the long- time ruling Liberal Democratic Party (the LDP). That Supreme Court justices defer to the LDP simply reflects the fact that they are appointed by the LDP at very a senior level. That lower court judges defer reflects -- we hypothesize that judges who defer on sensitive political questions do better in their careers. To test this, measure the quality of the assignments that some 400 judges received after deciding various categories of cases. To test the effect of a judge's decision on his job assignments, we …
Why Is The Japanese Conviction Rate So High?, Eric Bennett Rasmusen, J. Mark Ramseyer
Why Is The Japanese Conviction Rate So High?, Eric Bennett Rasmusen, J. Mark Ramseyer
Eric Bennett Rasmusen
Conviction rates are high in Japan. Why? We suggest it is because Japanese prosecutors are understaffed. If they can afford to bring only their strongest cases, judges see only the most obviously guilty defendants, and high conviction rates would then follow. Crucially, however, Japanese judges face biased incentives. A judge who acquits a defendant runs significant risks of hurting his career and earns scant hope of positive payoffs. Using data on the careers and published opinions of 321 Japanese judges (all judges who published an opinion on a criminal case in 1976 or 1979), we find skewed incentives to convict. …
The Uneasy Case For The Flat Tax, Eric Bennett Rasmusen, F. H. Buckley
The Uneasy Case For The Flat Tax, Eric Bennett Rasmusen, F. H. Buckley
Eric Bennett Rasmusen
There is a secret paradox at the heart of social contract theories. Such theories assume that, because personal security and private property are at risk in a state of nature, subjects will agree to grant Leviathan a monopoly of violence. But what is to prevent Leviathan from turning on his subjects once they have lain down their arms? If Leviathan has the same incentives as his subjects in the Hobbesian state of nature, he will plunder them more thoroughly than ever they plundered themselves in the state of nature. Thus the social contract always leaves subjects worse off, unless Leviathan …
Naked Exlusion: Reply, Eric Bennett Rasmusen, J. Mark Ramseyer, John Shepard Wiley Jr.
Naked Exlusion: Reply, Eric Bennett Rasmusen, J. Mark Ramseyer, John Shepard Wiley Jr.
Eric Bennett Rasmusen
Our one- page reply to Whinston and Siegal's forthcoming AER article correcting and elaborating our 1991 AER article.
Skewed Incentives: Paying For Politics As A Japanese Judge, Eric Bennett Rasmusen, J. Mark Ramseyer
Skewed Incentives: Paying For Politics As A Japanese Judge, Eric Bennett Rasmusen, J. Mark Ramseyer
Eric Bennett Rasmusen
A nontechnical survey of our work on Japanese courts for the practitioner journal, Judicature.
Creating And Enforcing Norms, With Special Reference To Sanctions, Eric Bennett Rasmusen, Richard A. Posner
Creating And Enforcing Norms, With Special Reference To Sanctions, Eric Bennett Rasmusen, Richard A. Posner
Eric Bennett Rasmusen
Two central puzzles about social norms are how they are enforced and how they are created or modified. The sanctions for violation of a norm can be categorized as automatic, guilt, shame, informational, bilateral- costly, and multilateral-costly. Problems in creating and enforcing norms are related to which sanctions are employed. We use our analysis of enforcement and creation of norms to analyze the scope of feasible government action either to promote desirable norms or to repress undesirable ones.
Why The Japanese Taxpayer Always Loses, Eric Bennett Rasmusen, J. Mark Ramseyer
Why The Japanese Taxpayer Always Loses, Eric Bennett Rasmusen, J. Mark Ramseyer
Eric Bennett Rasmusen
The tax office wins most cases in Japan. We think about why this might be. We find that although judges who rule in favor of the taxpayer do not suffer in their future careers, if the loser-- whether governemnt or taxpayer-- appeals and wins, the reversed judge's career does take a turn for the worse. This implies that the government cares more about accurate judging than about pro-government judging.
Review Of Coasean Economics: Law And Economics And The New Institutional Economics Edited By Steven Medema, Eric Bennett Rasmusen
Review Of Coasean Economics: Law And Economics And The New Institutional Economics Edited By Steven Medema, Eric Bennett Rasmusen
Eric Bennett Rasmusen
A book review which talks about what kinds of papers I'd like to see written.
Observed Choice, Estimation, And Optimism About Policy Changes, Eric Bennett Rasmusen
Observed Choice, Estimation, And Optimism About Policy Changes, Eric Bennett Rasmusen
Eric Bennett Rasmusen
A policy will be used more heavily in a particular time and place where its marginal cost is lower. The analyst who treats times and places as identical will overestimate the policy's net benefit, especially for policy intensities greater than exist in his sample. In regression analysis, the problem can be solved by instrumental variables and a correction for heteroskedasticity. In an example using state- level data, the technique substantially increases the estimated responsiveness of the illegitimacy rate to transfer payments.
The Economics Of Desecration: Flag Burning And Related Activities., Eric Bennett Rasmusen
The Economics Of Desecration: Flag Burning And Related Activities., Eric Bennett Rasmusen
Eric Bennett Rasmusen
When a symbol is desecrated, the desecrator obtains benefits while those who venerate the symbol incur costs. The approach to policy used in this paper is to ask whether the benefits are likely to exceed the costs. I conclude that they usually do not. Desecration is often motivated by a desire to reduce the utility of others, which generally is inefficient. Also, if desecration occurs, people have less incentive to create and maintain symbols. Symbols, like other produced goods, need property- rights protection if the outcome is to be efficient. Laws against desecration are a good way to provide this …
From Miranda To Mezzanatto: The Economics Of Self Incrimination, Eric Bennett Rasmusen
From Miranda To Mezzanatto: The Economics Of Self Incrimination, Eric Bennett Rasmusen
Eric Bennett Rasmusen
A 1995 Supreme Court decision allowed defendants in criminal trials to waive their rights to block use of information disclosed by them during the plea bargaining process. Does this really encourage plea bargaining?
Nuisance Suits, Eric Bennett Rasmusen
Nuisance Suits, Eric Bennett Rasmusen
Eric Bennett Rasmusen
Nuisance suits can be defined a number of ways, explained a number of ways, and prevented in a number of ways. I survey them.
Lifting The Veil Of Ignorance: Personalizing The Marriage Contract, Eric Bennett Rasmusen, Jeffrey Stake
Lifting The Veil Of Ignorance: Personalizing The Marriage Contract, Eric Bennett Rasmusen, Jeffrey Stake
Eric Bennett Rasmusen
Modern state laws only allow marriages in which each party can unilaterally divorce the other. We argue that the law should clearly permit parties to contract for more restrictive forms of marriage.
The Observed Choice Problem In Estimating The Cost Of Policies, Eric Bennett Rasmusen
The Observed Choice Problem In Estimating The Cost Of Policies, Eric Bennett Rasmusen
Eric Bennett Rasmusen
A very short version of my Public Choice paper which makes the basic point that OLS estimation of the costs of deliberately chosen policies will be biased downwards.
Review Of Timur Kuran, Private Truths, Public Lies: The Social Consequences Of Preference Falsification, Eric Bennett Rasmusen
Review Of Timur Kuran, Private Truths, Public Lies: The Social Consequences Of Preference Falsification, Eric Bennett Rasmusen
Eric Bennett Rasmusen
A review of a book on what happens when people's statement of their information depends on what other people are saying.
A Theory Of Trustees, And Other Thoughts, Eric Bennett Rasmusen
A Theory Of Trustees, And Other Thoughts, Eric Bennett Rasmusen
Eric Bennett Rasmusen
This paper combined a brief description of my work on negotiation with comments on other papers presented on central banking and a new paradigm for thinking of judges and central bankers as trustees working on behalf of beneficiaries as directed by settlors. It has my 4 P's Theory of motivation: Place, Pride, Policy, and Power. Available, including a post-publication postscript adding Principle
The Learning Curve In A Competitive Industry, Eric Bennett Rasmusen, Emmanuel Petrakis, Santanu Roy
The Learning Curve In A Competitive Industry, Eric Bennett Rasmusen, Emmanuel Petrakis, Santanu Roy
Eric Bennett Rasmusen
We consider the learning curve in an industry with free entry and exit, and price- taking firms. A unique equilibrium exists if the fixed or entry cost is positive. While equilibrium profits are zero, mature firms earn rents on their learning, and no firm can profitably enter after the date the industry begins. However, under some cost and demand conditions, firms may have to exit the market despite their experience gained earlier. Furthermore, in an equilibrium with exit, identical firms facing the same prices produce different quantities. Industry concentration need not increase in the intensity of learning. The market outcome …
Choosing Among Signalling Equilibria In Lobbying Games, Eric Bennett Rasmusen
Choosing Among Signalling Equilibria In Lobbying Games, Eric Bennett Rasmusen
Eric Bennett Rasmusen
Randolph Sloof has written a comment on the lobbying-as-signalling model in Rasmusen (1993) in which he points out an equilibrium I missed and criticizes my emphasis on a particular separating equilibrium. In this response, I discuss how to interpret multiple equilibria in games and how to interpret mixed strategy equilibria in which two types of player with identical incentives must pick different mixing probabilities.
Judicial Independence In Civil Law Regimes: Econometrics From Japan, Eric Bennett Rasmusen, J. Mark Ramseyer
Judicial Independence In Civil Law Regimes: Econometrics From Japan, Eric Bennett Rasmusen, J. Mark Ramseyer
Eric Bennett Rasmusen
Judges in Japan cannot be fired if their decisions offend the government, but they follow a career path in which the location and type of positions they hold may be subject to political influence. We have obtained a comprehensive record of career assignments for judges educated after the Second World War. We couple data on judicial output (the quantity and nature of a judge's opinions) with these career records. We examine judges who began their careers 1961-65, focussing on the Class of 1965, for whom we have determined the number of pro- and anti- government decisions. If the promotion process …
Signal Jamming And Limit Pricing: A Unified Approach, Eric Bennett Rasmusen
Signal Jamming And Limit Pricing: A Unified Approach, Eric Bennett Rasmusen
Eric Bennett Rasmusen
In signal jamming, an rival uses observed profits to predict profitability, but those profits can be manipulated by a rival firm. In the present model, the size of the market is known to the incumbent, who is one of two firms that might occupy it. The potential rival observes profits, which can be manipulated by the incumbent. Depending on the monopoly premium and the prior probability that the market is large, the equilibrium may be pooling in pure or mixed strategies, or separating, which are similar to the signal- jamming and signalling equilibria of Fudenberg \& Tirole (1986) and Milgrom …
Review Discussion: Game Theory And The Law By Douglas Baird, Robert Gertner, And Randall Picker, Eric Bennett Rasmusen, Kenneth Dau- Schmidt, Michael Alexeev, Jeff Stake, Bob Heidt
Review Discussion: Game Theory And The Law By Douglas Baird, Robert Gertner, And Randall Picker, Eric Bennett Rasmusen, Kenneth Dau- Schmidt, Michael Alexeev, Jeff Stake, Bob Heidt
Eric Bennett Rasmusen
Our dialogue- form review of the 1994 book by Douglas Baird, Robert Gertner \& Randall Picker.
The Posner Argument For Transferring Health Spending From Old Women To Old Men, Eric Bennett Rasmusen
The Posner Argument For Transferring Health Spending From Old Women To Old Men, Eric Bennett Rasmusen
Eric Bennett Rasmusen
Richard Posner suggests several arguments for increasing health care spending on males and reducing it on females in his book Aging and Old Age. I offer a new formalization of his verbal argument.
Stigma And Self-Fulfilling Expectations Of Criminality, Eric Bennett Rasmusen
Stigma And Self-Fulfilling Expectations Of Criminality, Eric Bennett Rasmusen
Eric Bennett Rasmusen
In modelling crime, economists have focussed on the expected cost of government sanctions to the criminal, but private sanctions--- notably economic or social stigma--- may be just as important. In the model here, workers decide whether to commit crimes and employers decide how much to pay ex- convicts. In one equilibrium, individuals refrain from crime and economic stigma--- the wage loss from conviction--- is high. In a second, pareto- inferior equilibrium, individuals commit crimes and stigma is low, because employers realize that nonconviction does not imply noncriminality. The model may help to explain large shifts in crime, such as that …