Volume 10, Issue 2 -

In a model of pretrial bargaining under asymmetric information, we analyze the defendant’s threat to proceed to trial in the face of a rejected offer. The incidence of trial is lower when the defendant’s constraint is binding compared with the unconstrained case. The signs of some of the comparative statics of the model are a function of whether or not the defendant’s credibility constraint is binding. In particular, fee shifting has no effect on the incidence of trial when the credibility constraint is not binding, but has an ambiguous effect when the constraint is binding. In this latter case, the use of fee shifting will lower the incidence of trial if and only if the plaintiff expects to shift fees on net to the defendant.

We test the extent to which political variables can explain judicial behavior in the Brazilian Supreme Court (STF) when dealing with conflicts between the federal government (namely, the union) and the states. One view argues that we should expect some alignment between the political preferences of the justices and the success of the union primarily due to the appointment mechanism. The opposite view suggests that there should be no systematic alignment between the political preferences of the justices and the success of the union as a consequence of political insulation. We built an original dataset encompassing different types of constitutional actions judged between 1988 and 2010 by the STF. Our research focuses fundamentally on the alignment between revealed judicial preferences when adjudicating cases and presidential appointments in Brazil. We find some evidence that judicial preferences do matter, but the patterns of politicization are weaker than in other similar courts. We also discuss the implications of our findings for comparative judicial politics; in particular, we do not observe strong partisanship.

Competitive bidding (CB) is the dominant governmental contracting mechanism by which hundreds of billions of dollars are allocated annually. We claim that when bid evaluators assess the qualitative components of competing bids while being exposed to the bid prices, a systematic bias occurs that gives an unjust advantage to the lower bidder. We term this the Lower-Bid Bias. It is then shown that this bias can be neutralized by splitting the evaluation process into two stages, whereby bid price is revealed only after the evaluation process has culminated (two-stage CB). This is demonstrated through the findings of a survey and three controlled experiments, the first to be conducted with procurement officials. We also explain why this bias is undesirable and suggest a mandatory rule, requiring two-stage CB for any competitive public procurement based on evaluation criteria other than price. Further applications of the experiments’ findings are also discussed.

We construct a one-shot corruption game with three players, a briber who can decide to bribe or not, an official who can reciprocate or not and an inspector who can decide to inspect or not. We employ four penalties that can be distributed asymmetrically, making it possible to punish bribing and bribe-taking as well as reciprocating and receiving reciprocation to different degrees. Penalties apply if corruption is detected. The probability of detection is endogenised, as it depends on inspection. The model differs from other inspection games in that the offence (corruption) can only be completed through a joint effort of the two offending players. This leads to surprising results, especially in conjunction with asymmetric penalties. First, in contrast to Tsebelis’ results, we find that, with endogenous detection, higher penalties do reduce the overall rate of offence. Second, this result holds only if the penalty for reciprocating on the official is raised. Surprisingly, and unlike other asymmetric penalty prescriptions in the corruption literature, higher penalties on the briber have the opposite effect. They may reduce the probability of bribery, but they also increase the probability of reciprocation to the extent that the overall probability of reciprocated bribery is increased.

Using a quasi-maximum likelihood Poisson estimator with fixed effects, this paper tests a theory presented in Rubin (1973) that organized criminal firms extract monopoly rents from victim firms that gain monopoly power through the offering of goods and services in a non-native language. Using a US state panel and data on federal racketeering cases charged, I find that all else equal, a 0.1 percentage point increase in the amount of non-English speakers in a state will increase the expected number of racketeering cases per state per year by about 1. This is weakly supported by the fact that states with fewer small businesses, and thus a higher probability of earning monopoly rents, experience less racketeering activity.