Search results for: Author=Engel, Christoph [406]

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2012
Assuring Adequate Deterrence in Tort: A Public Good Experiment
2012/07
Max Planck Institute for Research on Collective Goods
Bonn
2012
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.
Conditional Cooperation With Negative Externalities – An Experiment
2012/02
Max Planck Institute for Research on Collective Goods
Bonn
2012
Abstract
Empirically, the commons are not as tragic as standard theory predicts. The predominant explanation for this finding is conditional cooperation. Yet many real life situations involve insiders, who are directly affected by a dilemma, and outsiders, who may be harmed if the insiders overcome the dilemma. The quintessential illustration is oligopoly. If insiders overcome their dilemma and collude, this inflicts harm on the opposite market side. In our experiment, harm on outsiders significantly reduces conditional cooperation of insiders. We can exclude that this result is driven by inequity aversion, reciprocity or efficiency seeking. Only guilt aversion can rationalize our findings, with guilt being most pronounced if the active insiders not only inflict harm on the outsider, but increase their own payoff at the expense of the outsider.
Effort and Redistribution: Better Cousins Than One Might Have Thought
2012/10
Max Planck Institute for Research on Collective Goods
Bonn
2012
Abstract
In this paper, we analyze the link between effort and preferences for redistribution. If individuals hold standard preferences, those with higher ability exert more effort. Higher effort leads to a higher income. Individuals with a higher income oppose redistribution. Yet, under non-standard preferences, the link between effort and redistribution is not clear-cut. If aversion to inequity is sufficiently strong, even individuals with high ability may support redistribution. In a lab experiment, we indeed find that participants with higher ability are willing to help the needy if earning income becomes more difficult for everybody. To check whether this finding is externally valid, we use data from the World Value Survey. We do not find a significant positive effect of preferences for effort on preferences for redistribution, but we also do not find the significant negative effect predicted by standard theory. Also, in the field, those who have to pay for redistribution are not more likely to be opposed than the recipients.
Estimation of the House Money Effect Using Hurdle Models
2012/13
Max Planck Institute for Research on Collective Goods
Bonn
2012
Abstract
Evidence from an experiment investigating the “house money effect” in the context of a public goods game is reconsidered. Analysis is performed within the framework of the panel hurdle model, in which subjects are assumed to be one of two types: free-riders, and potential contributors. The effect of house money is seen to be significant in the first hurdle: specifically, house money makes a subject more likely to be a potential contributor. Hence we find that the effect of house money is more than just an effect on behaviour; it has the effect of changing a subject from one type to another. This result is potentially important in the external validity debate.
Fair Exclusion
Journal of Institutional and Theoretical Economics
168
171-175
2012
Low Self-Control As a Source of Crime. A Meta-Study
2012/04
Max Planck Institute for Research on Collective Goods
Bonn
2012
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.
Neglect the Base Rate: It’s the Law!
2012/23
Max Planck Institute for Research on Collective Goods
Bonn
2012
Abstract
If accurate prediction is the goal, and if information about the unconditional probability of the predicted event is available, a strong case can be made for using this information, i.e. for a Bayesian approach to inference. Not so rarely, the law calls for accurate prediction, e.g. if a bailing decision hinges on an estimate of recidivism risk. Yet for other questions of law, and for the law of evidence in particular, accuracy is not the exclusive goal. Substantive law determines who should bear the risk that doubt cannot be removed. These rules decide whether several individuals, or several acts for that matter, shall be treated as members of a class. Applying Bayes’ rule also implicitly treats the person or the action in question as a member of a class. If in conflict, the normative decision of substantive law overrides Bayes’ rule, and forces judges and administrators to neglect the base rate.
Öffentliches Wirtschaftsrecht aus der Sicht der ökonomischen Theorie
Besonders Verwaltungsrecht I
I
40-62
2012
Symmetric vs. Asymmetric Punishment Regimes for Bribery
2012/01
Max Planck Institute for Research on Collective Goods
Bonn
2012
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.
Testing Contracts
Journal of Institutional and Theoretical Economics (JITE) (29th International Seminar on the New Institutional Economics)
168
Mohr Siebeck
2012