Copyright (c) 2009 All rights reserved. http://works.bepress.com/abraham_wickelgren Recent documents in Abraham L. Wickelgren en-us Sun, 04 Jan 2009 03:21:43 PST 3600 http://works.bepress.com/abraham_wickelgren/20 http://works.bepress.com/abraham_wickelgren/20 Tue, 08 Jul 2008 12:41:28 PDT We revisit Lucian Bebchuk's (1996) claim that plaintiff's can use the sequential nature of litigation to extract a positive settlement from a negative expected value suit. We make three claims. First, this result is heavily dependent on the specific bargaining game he uses. Second, in an alternating offer bargaining game, the outside option principle demonstrates that this cost sinking strategy will not allow a negative expected value plaintiff to extract a positive settlement offer. Third, this cost sinking strategy, however, can be effective for a defendant using a negative expected value defense. Warren F. Schwartz Settlement http://works.bepress.com/abraham_wickelgren/19 http://works.bepress.com/abraham_wickelgren/19 Tue, 08 Jul 2008 12:35:46 PDT The belief that it is better for cases to settle than go to trial is widespread, but the arguments in favor of settlement have typically overlooked how settlement affects one of the most important functions of the legal system: deterring undesirable behavior that gives rise to lawsuits. This essay argues that settlement can impair the ability of the legal system to deter harmful behavior selectively without chilling desirable behavior. Where it exists, this effect is a fundamental property of settlement in that there is no way to change other legal rules to eliminate it. Because settlement also has important benefits, such as the reducing legal costs and reducing uncertainty, this essay does not argue for any across the board prohibition of settlement. Rather, it suggests that judges should be more circumspect about encouraging settlements and that there may even be situations where some restrictions on settlement are warranted. Ezra Friedman Settlement http://works.bepress.com/abraham_wickelgren/18 http://works.bepress.com/abraham_wickelgren/18 Tue, 08 Jul 2008 12:29:28 PDT The Fifth Amendment guarantees criminal defendants the right to silence, blocking the court from drawing adverse inferences from the defendant's silence. This paper investigates the conditions under which extending such protection to civil defendants might increase (or decrease) social welfare. If discovery is imperfect, then defendants that acquire information about the dangerousness of their actions may hide this evidence at trial if it is bad. This tends to make the private benefit from acquiring such information exceed the social benefit. Furthermore, the private benefit from acquiring this information is greater when the court will infer the information is bad if the defendant does not present it. Thus, there are situations in which a right to silence may be necessary to prevent a defendant from acquiring information for which the social costs exceed the social benefit. On the other hand, if it is hard to hide damaging information, and the release of damaging information tends to induce lawsuits, then a right to silence may dampen already insufficient incentives to acquire information. Abraham L. Wickelgren Other Law and Economics http://works.bepress.com/abraham_wickelgren/17 http://works.bepress.com/abraham_wickelgren/17 Wed, 03 Oct 2007 12:16:17 PDT Contracts that involve the government differ from contracts between two private parties in that the identity of one of the parties, the government, is subject to change. Given that the incumbent government knows that it might not be in power when the contract is completed, it may have an incentive to structure the contract to make it more difficult for a new government to renegotiate it. I show that traditional damage measures used in contracts between two private parties exacerbate this problem. The reliance damage measure induces the incumbent government to enlarge projects beyond the socially optimal level when it fears that a new government will want to cut it back. Expectation damages suffer from the same defect, though to a lesser extent. Abraham L. Wickelgren Contract Theory http://works.bepress.com/abraham_wickelgren/16 http://works.bepress.com/abraham_wickelgren/16 Wed, 03 Oct 2007 12:13:01 PDT The criminal punishment literature has focused on justifying non-maximal punishments and the use of non-monetary sanctions. It has not addressed why imprisonment, rather than cheaper forms of corporal punishment, should be the dominant type of non-monetary sanctions. David Friedman (1999) recently hypothesized that, because convicts lack political influence, it is desirable to make punishment more costly than necessary to prevent policy makers from excessively punishing convicts. This paper explicitly models this hypothesis and uses simulations to determine under what circumstances this hypothesis justifies using imprisonment rather than cheaper non-monetary sanctions. Abraham L. Wickelgren Criminal Law and Economics http://works.bepress.com/abraham_wickelgren/15 http://works.bepress.com/abraham_wickelgren/15 Wed, 03 Oct 2007 12:05:41 PDT Critical loss analysis is often used to argue that firms with large margins have more to lose from a reduction in sales and hence are less likely to increase prices. This argument ignores the implication of economic theory that profit-maximizing competitors that do not coordinate their pricing only have large margins if their customers are not very price sensitive. We explore the implications of critical loss analysis using an internally consistent model of oligopoly. We show that for a given degree of substitutability between the merging firms' products, firms with larger pre-merger margins will raise prices more than firms with smaller margins. This reinforces the traditional view that mergers are more likely to harm consumers when the merging firms have greater market power, as measured by their margins. We also derive internally consistent formulas for evaluating the profitability of price increases when defining markets and evaluating unilateral competitive effects. Daniel P. O'Brien Antitrust and Industrial Organization http://works.bepress.com/abraham_wickelgren/14 http://works.bepress.com/abraham_wickelgren/14 Wed, 03 Oct 2007 11:58:49 PDT Daniel P. O'Brien Antitrust and Industrial Organization http://works.bepress.com/abraham_wickelgren/13 http://works.bepress.com/abraham_wickelgren/13 Wed, 03 Oct 2007 11:54:56 PDT I analyze the innovation incentives under monopoly and duopoly provision of horizontally differentiated products purchased via bilateral negotiations, integrating the market structure and innovation literature with the holdup literature. I show that competition can improve local incentives for non-contractible investment. Because innovation levels are generally strategic substitutes, however, there can be multiple duopoly equilibria. In some circumstances, monopoly can provide a coordination device that can lead to greater expected welfare despite inferior local innovation incentives. The conditions for this to be the case, however, are quite restrictive. Abraham L. Wickelgren Antitrust and Industrial Organization http://works.bepress.com/abraham_wickelgren/12 http://works.bepress.com/abraham_wickelgren/12 Wed, 03 Oct 2007 11:51:12 PDT Polinsky and Rubinfeld (2003) propose a novel system for eliminating the conflict of interest between lawyers and clients over how hard the lawyer should work on a given case. In their analysis of the system, however, Polinsky and Rubinfeld implicitly assume that the lawyer's marginal cost of effort is common knowledge. This comment shows that, when that assumption is relaxed, while their scheme does reduce the agency problem relative to the standard contingency fee arrangement, it no longer eliminates it. Abraham L. Wickelgren Other Law and Economics http://works.bepress.com/abraham_wickelgren/11 http://works.bepress.com/abraham_wickelgren/11 Wed, 03 Oct 2007 11:47:12 PDT One of the most compelling reasons against affirmative action is the principle of color blindness, that is, the idea that race is an irrelevant characteristic that should not affect higher education admissions or hiring decisions. Despite the intuitive appeal of color blindness, this paper shows that adherence to this principle impedes economic efficiency when there has been past discrimination based on race. Past discrimination creates inefficiencies in the economy that persist across generations. Because of this persistence, race remains a relevant characteristic for firms and universities looking to hire or admit the best candidates. Rather than color-blindness, affirmative action is necessary to reduce or eliminate these inefficiencies. This is true even if the firm or university can observe the economic status of the applicant. Thus, affirmative action based on economic disadvantage does not eliminate the need for affirmative action based on race, even if the only concern is economic efficiency. Abraham L. Wickelgren Other Law and Economics