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on Law and Economics |
| By: | Theodore Eisenberg (Cornell University, Cornell Law School); Christoph Engel (Max Planck Institute for Research on Collective Goods, Bonn) |
| Abstract: | To explore damage rules’ deterrent effect, we use a public good experiment to tailor allowable punishment to rules used in actual civil litigation. The experimental treatments are analogous to: (1) damages limited to harm to an individual litigant, (2) damages limited to harm to a group available in aggregate litigation, such as class actions, and (3) damages allowed beyond actual harm to victims, such as punitive damages. The treatment with damages limited to harm to an individual does not prevent the deterioration in cooperation over time commonly found in public good experiments without punishment or with too low punishment. In the class action damages treatment, cooperation is stable over time. In the damages-beyond-harm treatment, cooperation approaches the optimal level, but concerns of socially unjust punishment arise. In all treatments, a money maximising agent would be expected to completely freeride and make no contribution to the public good. Our results can thus not be explained by an incentive effect. Rather we find that social preferences interact with the severity of sanctions, even if imposing the sanction is not altruistic, but instead financially benefits the sanctioning authority. The results persist in a variation of the three treatments in which the player imposing damages has the option to not retain them for herself but to have them forfeited with no benefit to her. We can therefore rule out that the beneficial effect of sanctions hinges on the participants knowing that the player imposing sanctions cannot intend to enrich herself. The methodology we develop could be used to assess the social welfare benefit of many damages rules, such as treble damages in antitrust cases and caps on damages common in medical malpractice cases and punitive damages cases. |
| Keywords: | Deterrence, Public Good Experiment, Class actions, Tort, Damages, Punitive damages |
| JEL: | K13 K4 C73 K0 |
| Date: | 2012–04 |
| URL: | http://d.repec.org/n?u=RePEc:mpg:wpaper:2012_07&r=law |
| By: | Christoph Engel (Max Planck Institute for Research on Collective Goods, Bonn); Sebastian Goerg (Max Planck Institute for Research on Collective Goods, Bonn); Gaoneng Yu (Max Planck Institute for Research on Collective Goods, Bonn) |
| Abstract: | In major legal orders such as UK, the U.S., Germany, and France, bribers and recipients face equally severe criminal sanctions. In contrast, countries like China, Russia, and Japan treat the briber more mildly. Given these differences between symmetric and asymmetric punishment regimes for bribery, one may wonder which punishment strategy is more effective in curbing corruption. For this purpose, we designed and ran a lab experiment in Bonn (Germany) and Shanghai (China) with exactly the same design. The results show that, in both countries, with symmetric punishment recipients are less likely to grant the socially undesirable favor, while bribers are more likely to report to the authorities with asymmetric punishment. In addition, when punishment was asymmetric, corrupt offers were significantly more likely in Shanghai, but not in Bonn. Our results suggest a tradeoff between deterrence and law enforcement. In a forward-looking perspective, lawmakers must decide which aim carries more weight. |
| Keywords: | Bribery, Punishment, Effectiveness, Asymmetry, Legislation |
| JEL: | C91 D02 D03 D73 K14 K42 |
| Date: | 2012–01 |
| URL: | http://d.repec.org/n?u=RePEc:mpg:wpaper:2012_01&r=law |
| By: | Christoph Engel (Max Planck Institute for Research on Collective Goods, Bonn) |
| Abstract: | Self-control theory is one of the best studied criminological paradigms. Since Gottfredson and Hirschi published their General Theory in 1990 the theory has been tested on more than a million subjects. This meta-study systematizes the evidence, reporting 717 results from 102 different publications that cover 966,364 original data points. The paper develops a methodology that makes it possible to standardize findings although the original papers have used widely varying statistical procedures, and have generated findings of very different precision. Overall, the theory is overwhelmingly supported, but the effect is relatively small, and is sensitive to adding a host of moderating variables. |
| Keywords: | meta-study, self-control, general theory of crime |
| JEL: | K42 D03 K14 C13 |
| Date: | 2012–02 |
| URL: | http://d.repec.org/n?u=RePEc:mpg:wpaper:2012_04&r=law |
| By: | Jieyao Ding (Max Planck Institute for Research on Collective Goods, Bonn) |
| Abstract: | Bracketing is a mental procedure about how people deal with multiple tasks. If a decision maker handles all the tasks at the same time, it is called broad bracketing. If she handles the tasks separately, e.g., one or a few tasks each time, it is called narrow bracketing. This paper experimentally investigates the effect of broad versus narrow bracketing in the context of a mini-trust game. The result shows that, in the narrow bracketing treatment, the investor (first mover) is more likely to place trust on others, but the receiver (second mover) is less likely to fulfill the trust under the same condition. The effect is partly conditional on beliefs in others' behavior. |
| Keywords: | meta-study, self-control, general theory of crime |
| JEL: | K42 D03 K14 C13 |
| Date: | 2012–03 |
| URL: | http://d.repec.org/n?u=RePEc:mpg:wpaper:2012_06&r=law |
| By: | Hagedoorn, John (UNU-MERIT/MGSoG, and Department of Organization & Strategy, School of Business and Economics, Maastricht University); Ridder, Ann-Kristin (Department of Organization & Strategy, School of Business and Economics, Maastricht University) |
| Abstract: | Our exploratory empirical study, based on a series of in-depth interviews and a survey of firms, searches for answers on a number of questions that deal with the role of formal contracts and intellectual property rights in the context of open innovation. We find that firms active in open innovation have a strong preference for the governance of their open innovation relationships through formal contracts. These contracts are relevant from both a control and a process monitoring perspective. Also, despite the open nature of open innovation, firms still see intellectual property rights as highly relevant to the protection of their innovative capabilities. In a first attempt to explain this preference for intellectual property rights by open innovation firms, we find the degree of openness of firms, their legalistic attitude, and the competitive dynamics of their product market environment to be related to this preference. |
| Keywords: | open innovation, contracts, intellectual property rights |
| JEL: | K11 K12 L24 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:unumer:2012025&r=law |
| By: | Ojo, Marianne |
| Abstract: | This paper focuses on what constitutes “an attitude that includes a questioning mind and a critical assessment of audit evidence”, namely professional scepticism. This paper also focuses on factors and reasons contributory to the ever increasing use of (and the need for) forensic accountants – particularly in courts. It also addresses various standards which must be taken into consideration before testimonies provided by expert witnesses are considered to be admissible. |
| Keywords: | litigation support; investigative accounting; computer forensics; expert witnesses; fraud auditing |
| JEL: | K2 D8 M4 |
| Date: | 2012–04–18 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:38180&r=law |