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Permanent URI for this collectionhttps://hdl.handle.net/20.500.14288/3

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Department: search.filters.department.Department of EconomicsSubject: search.filters.subject.Law

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    An economic analysis of color-blind affirmative action
    (Oxford Univ Press Inc, 2008) Fryer, Roland G., Jr.; Loury, Glenn C.; Department of Economics; Yüret, Tolga; Teaching Faculty; Department of Economics; College of Administrative Sciences and Economics; N/A
    This article offers an economic analysis of color-blind alternatives to conventional affirmative action policies in higher education, focusing on efficiency issues. When the distribution of applicants' traits is fixed (i.e., in the short-run) color blindness leads colleges to shift weight from academic traits that predict performance to social traits that proxy for race. Using data on matriculates at several selective colleges and universities, we estimate that the short-run efficiency cost of "blind" relative to "sighted" affirmative action is comparable to the cost colleges would incur were they to ignore standardized test scores when deciding on admissions. We then build a model of applicant competition with endogenous effort in order to study long-run incentive effects. We show that, compared to the sighted alternative, color-blind affirmative action is inefficient because it flattens the function mapping effort into a probability of admission in the model's equilibrium.
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    Litigation and settlement under judicial agency
    (Elsevier Science Inc, 2012) N/A; Department of Economics; Department of Economics; Koçkesen, Levent; Usman, Ali Murat; Faculty Member; Teaching Faculty; Department of Economics; College of Administrative Sciences and Economics; College of Administrative Sciences and Economics; 37861; 100999
    We model the settlement of a legal dispute when the trial outcome depends on the behavior of a strategically motivated judge. A defendant, who is uninformed about the level of harm that he has caused, makes a take-it-or-leave-it offer to an informed plaintiff. If the parties cannot agree on a settlement and the case goes to trial, the judge decides how much effort to exert in discovering the actual damages. We show that, under very general assumptions, this model exhibits multiple equilibria. In some equilibria, the judge exerts less effort and more cases settle out of court, whereas in others the opposite occurs. We also show that the judge prefers the low effort equilibria with high settlement rate and argue that a "managerial judge" could easily steer the parties towards low effort equilibria. This may be deemed undesirable, since in low-effort equilibria, the terms of the settlement heavily favor the informed plaintiff, and this in turn induces over-investment in ex ante preventive care by the defendant.
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    Verifiability and contract enforcement: a model with judicial moral hazard
    (Oxford University Press (OUP) inc, 2002) Department of Economics; Usman, Ali Murat; Teaching Faculty; Department of Economics; College of Administrative Sciences and Economics; 100999
    I model the litigation of a contract containing a variable not observable by courts, hence nonverifiable, unless the rational and self-interested judge exerts effort. He values the correct ruling but dislikes effort. Judicial effort is discretionary. I show that effort cost is inconsequential-"always breach" is equilibrium for any effort cost. But there exists another equilibrium where a small breach rate is achieved even with significant effort costs. Maximal remedies for breach are not optimal. Because effort is discretionary, low effort cost increases breach. Pretrial negotiations can have a substantial negative impact on verifiability under arbitrarily small deviations from full rationality.