Court Efficiency and Procurement Performance Coviello, Decio; Moretti, Luigi; Spagnolo, Giancarlo ...
The Scandinavian journal of economics,
July 2018, Volume:
120, Issue:
3
Journal Article
Peer reviewed
Open access
Disputes over penalties for breaching a contract are often resolved in court. A simple model illustrates how inefficient courts can sway public buyers from enforcing a penalty for late delivery in ...order to avoid litigation, thereby inducing sellers to delay contract delivery. By using a large dataset on Italian public procurement, we empirically study the effects of court inefficiency on public work performance. Where courts are inefficient, we find the following: public works are delivered with longer delays; delays increase for more valuable contracts; contracts are more often awarded to larger suppliers; and a higher share of the payment is postponed after delivery. Other interpretations receive less support from the data.
This paper estimates the impact of competition policy on total factor productivity growth for 22 industries in twelve OECD countries over 1995 to 2005. We find a positive and significant effect of ...competition policy as measured by created indexes. We provide results based on instrumental variables estimators and heterogeneous effects to support the causal nature of the established link. The effect is particularly strong for specific aspects of competition policy related to its institutional setup and antitrust activities. It is also strengthened by good legal systems, suggesting complementarities between competition policy and the efficiency of law enforcement institutions.
Using the synthetic control method, we construct counterfactuals for what would have happened if Sweden had imposed a lockdown during the first wave of the COVID-19 epidemic. We consider eight ...different indicators, including a novel one that we construct by adjusting recorded daily COVID-19 deaths to account for weakly excess mortality. Correcting for data problems and re-optimizing the synthetic control for each indicator, we find that a lockdown would have had sizable effects within one week. The much longer delay estimated by two previous studies focusing on the number of positives cases is mainly driven by the extremely low testing frequency that prevailed in Sweden in the first months of the epidemic. This result appears relevant for choosing the timing of future lockdowns and highlights the importance of looking at several indicators to derive robust conclusions. We also find that our novel indicator is effective in correcting errors in the COVID-19 deaths series and that the quantitative effects of the lockdown are stronger than previously estimated.
We study social dilemmas in (quasi-) continuous-time experiments, comparing games with different durations and termination rules. We discover a stark qualitative contrast in behavior in continuous ...time as compared to previously studied behavior in discrete-time games: cooperation is easier to achieve and sustain with deterministic horizons than with stochastic ones, and end-game effects emerge, but subjects postpone them with experience. Analysis of individual strategies provides a basis for a simple reinforcement learning model that proves to be consistent with this evidence. An additional treatment lends further support to this explanation.
The frequency of interaction facilitates collusion by reducing gains from defection. Theory has shown that under imperfect monitoring flexibility may hinder cooperation by inducing punishment after ...too few noisy signals, making collusion impossible in many environments (Sannikov and Skrzypacz in Am Econ Rev 97:1794-1823, 2007). The interplay of these forces should generate an inverse U-shaped effect of flexibility on collusion. We test for the first time these theoretical predictions—central to antitrust policy—in a laboratory experiment featuring an indefinitely repeated Cournot duopoly, with different degrees of flexibility. Results turn out to depend crucially on whether subjects can communicate with each other at the beginning of a supergame (explicit collusion) or not (tacit collusion). Without communication, the incidence of collusion is low throughout and not significantly related to flexibility; when subjects are allowed to communicate, collusion is more common throughout and significantly more frequent in the treatment with intermediate flexibility than in the treatments with low or high flexibility.
It is often claimed that rewards for whistleblowers lead to fraudulent reports, but for several US programs this has not been a major problem. We model the interaction between rewards for ...whistleblowers, sanctions against fraudulent reporting, judicial errors, and standards of proof in the court case on a whistleblower’s allegations and the possible follow-up for fraudulent allegations. Balancing whistleblower rewards, sanctions against fraudulent reports, and courts’ standards of proof is essential for these policies to succeed. When the risk of retaliation is severe, larger rewards are needed and so are tougher sanctions against fraudulent reports. The precision of the legal system must be sufficiently high, hence these programs are not viable in weak institution environments, where protection is imperfect and court precision low, or where sanctions against false reporting are mild.
Memory and Markets Kovbasyuk, Sergey; Spagnolo, Giancarlo
The Review of economic studies,
05/2024, Volume:
91, Issue:
3
Journal Article
Peer reviewed
Abstract In many environments, including credit and online markets, records about participants are collected, published, and erased after some time. We study the effects of erasing past records in a ...dynamic market where the quality of sellers follows a Markov process, and buyers leave feedback about sellers to an information intermediary. When the average quality of sellers is low, unlimited records lead to a market breakdown in the long run. We consider the information design problem and characterize information policies that can sustain trade and that maximize social welfare. These policies hide some information from the market in order to foster socially desirable experimentation. We show that these outcomes can be implemented by appropriately deleting past records. Crucially, positive and negative records play opposite roles with different intensities and must have different lengths: negative records must be deleted sufficiently late, and positive ones sufficiently early.
We propose an axiomatic approach for equilibrium selection in the discounted, infinitely repeated symmetric Prisoner's Dilemma. Our axioms characterize a unique selection criterion that is also ...useful as a tool for applied comparative statics exercises as it results in a critical discount factor δ* strictly larger than δ̱, the standard criterion that has often been used in applications. In an experimental test we find a strong predictive power of our proposed criterion. For parameter changes where the standard and our criterion predict differently, changes in observed cooperation follow predictions based on δ.*
Based on my recent work with several co-authors this paper explores the relationship between discretion, reputation, competition and entry in procurement markets. I focus especially on public ...procurement, which is highly regulated for accountability and trade reasons. In Europe regulation constrains the use of past performance information to select contractors while in the US its use is encouraged. I present some novel evidence on the benefits of allowing buyers to use reputational indicators based on past performance and discuss the complementary roles of discretion and restricted competition in reinforcing relational/reputational forces, both in theory and in a new empirical study on the effects restricted rather than open auctions. I conclude reporting preliminary results form a laboratory experiment showing that reputational mechanisms can be designed to stimulate rather than hindering new entry.
► We discuss the complementary roles of discretion and restricted competition in reinforcing relational/reputational forces. ► We present preliminary evidence on the likely benefits of allowing buyers to use reputation indicators and restricted auctions. ► Finally, we report preliminary results form an experiment showing that reputational mechanisms can be designed to stimulate new entry rather that hindering it.
This paper addresses the effects of social relations on cooperation (or collusion) in organizations (or communities). Social and production relations are modeled as separate repeated strategic ...interactions. “Linking” them – by employing members of the same community or encouraging social interaction between employees – facilitates cooperation in production: (a) because of available “social capital,” the slack of enforcement power present in social relations which may discipline behavior in the workplace; (b) because payoffs from the two relations are substitutes, therefore the linkage endogenously generates social capital; (c) because the linkage generates transfers of “trust”; and (d) it discloses information about agents' situation.
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