Amy Farmer

An Economic Analysis of Domestic Violence

While economists have been studying the family as an economic unit for almost thirty years, most models have focused on cooperative family units. Domestic violence, one of the most widespread violent crimes against women, is one example of a family unit that is better explained as a noncooperative re1ationship. In this paper, a noncooperative model of domestic violence is presented. The comparative statics from this model predict that womens incomes and other financial support received from outside the marriage (family, welfare, shelters, divorce settlements, etc.) will decrease the level of violence in intact families because they increase the womans threat point. Implications of the theoretical model are discussed and empirical evidence is summarized. The results from existing and new analysis provide support for the hypothesis that improved economic opportunities for women will decrease the level of violence in abusive re1ationships.

Legal expenditure as a rent-seeking game*

Legal expenditures at a civil trial constitute an interesting type of rent-seeking contest. In civil litigation there is a natural interaction between the objective merits of the case and the outcome of the contest. Institutions such as fee shifting do not generally have a counterpart in other rent-seeking contests. The endogenous decision to participate in the rent-seeking contest corresponds to the decision by the plaintiff to bring a case, and the decision by the defendant to defend it. The desirability of fee shifting is very sensitive to the value of the parameter which describes the legal technology.

Optimal Betting and Efficiency in Parimutuel Betting Markets with Information Costs

Empirical studies of parimutuel games establish several facts not previously explained by theory. For example, market odds fail to provide accurate predictions of outcomes and longshots earn lower expected values than other bets. This paper outlines a model of parimutuel games in which such outcomes arise as a consequence of the takeout of the track. Bettors may purchase true probabilities of events, and equilibrium entry and wagers of these informed bettors lead to patterns observed in previous studies. A case study of the Woodlands Greyhound Park supplies evidence consistent with the model. Copyright 1996 by Royal Economic Society.

The Causes of Bargaining Failure: Evidence from Major League Baseball

Abstract Final‐offer arbitration in Major League Baseball provides an ideal setting for examining the empirical regularities that are associated with bargaining failure, since final offers, salaries, and player statistics, which provide the fundamental facts for the case, are all readily available. Using data for players eligible for arbitration for 1990–93, we conduct a wide variety of empirical tests regarding the relationship between aggressive offers and arbitration outcomes. We find that aggressive offers by players trigger arbitration and that more aggressive offers are associated with inferior financial outcomes in arbitration. Overall, clubs appear to outperform players in arbitration. Unexpectedly high or low offers are less common for players who have previously been through arbitration, which suggests that learning occurs. Our results are inconsistent with simple one‐sided asymmetric‐information models of arbitration. The results are more consistent with an optimism model or a model in which so...

Crime versus Justice: Is There a Trade-Off?

When society is divided into two groups with different actual or perceived crime rates, maintaining a low crime rate, minimizing the total number of innocent individuals convicted of a crime, and keeping the probability of wrongly convicting an innocent individual equal across groups are incompatible social goals. This paper fully develops these trade‐offs. An empirical application of the model finds that these trade‐offs may be substantial. Specifically, we estimate that innocent black Americans would be roughly eight times more likely to be wrongly convicted of murder than innocent white Americans if society placed no value on equality when it comes to convictions. However, we estimate that eliminating inequality entirely could cost up to 1,900 lives annually because of a rise in the murder rate. Estimates reveal similar findings for gender inequality. In highlighting this serious dilemma, this paper suggests a need for awareness of costs of crime‐reduction policies.

Civil Litigation with Mandatory Discovery and Voluntary Transmission of Private Information

Abstract We consider models of pretrial negotiations where both costly voluntary disclosure and costly mandatory discovery are possible. When the uninformed party makes the final offer (the screening game), mandatory discovery will be utilized if it is not very costly, but voluntary disclosure will not occur in the absence of a discovery procedure. When the informed party makes the final offer (the signaling game), mandatory discovery is never utilized, but voluntary disclosure will be utilized if it is not too costly to do so. Thus, mandatory discovery is effective in the information structure under which voluntary disclosure is not and vice versa. The results suggest that, taken together, the two institutions will lead to a great deal of information revelation and will significantly increase the probability of settlement.

Is the Coach Paid too Much? Coaching Salaries and the NCAA Cartel

Recently, a great deal of controversy has been generated from the salaries earned by head coaches in the NCAA. Although many figures in the world of sports earn high salaries, one important difference in the case of the NCAA is that the players do not get paid. We develop a model that shows that a cartel agreement to not pay the players raises the coachs salary if some players choose where to play based on the identity of the coach. The agreement not to pay the players improves competitive balance in the baseline model, but this result does not generalize.

Bargaining with Informative Offers: An Analysis of Final‐Offer Arbitration

Final‐offer arbitration is analyzed when parties are permitted to renegotiate after bids are submitted to the arbiter. If the failure to settle without arbitration arises owing to informational asymmetries, then the final‐offer bids may communicate some of this private information. The informational content of the bids may act to encourage settlement after the bids have been submitted, though this outcome is not guaranteed. We find that a pooling equilibrium, under which all cases settle prior to arbitration, is less likely when there exists an opportunity for renegotiation. However, for parameter values in which there is no pooling equilibrium, the renegotiation stage strictly reduces the use of arbitration. The results may prove important in comparing settlement rates between final‐offer arbitration and conventional arbitration.

THE EMPLOYMENT EFFECTS OF DOMESTIC VIOLENCE

Domestic violence is a social ill that results in significant social costs. While the employment costs of domestic violence are obvious to victims and advocates for battered women, there is little research that examines the relationship between abuse and women’s employment opportunities. In this paper, we build on existing models of domestic violence by presenting a model that allows for a simultaneous relationship between women’s income and violence. The validity of the model is tested empirically using several different data sets. The results are mixed. While the empirical evidence supports the model’s assumption that violence has a negative impact on the labor market productivity of working women, it also indicates that being a battered woman does not significantly decrease the likelihood that a woman participates in the labor market. In fact, empirical results indicate that after controlling for the simultaneity of violence and work, battered women are more likely to work than women who are not abused. While women who are victims of intimate abuse most likely find it much harder to work outside the home, these negative effects may be offset by strong incentives to increase their economic independence by holding jobs.

The double dividend, second-best worlds, and real-world environmental policy

Abstract The recent series of papers by Bovemberg, Goulder, Parry and others argue that the double dividend is unlikely to exist because of second-best problems. They argue that the imposition of environmental tax in an economy already distorted by income taxes will further distort the economy by reducing incentives to supply labor. Our paper argues that this is not likely to be the case because of the restrictive assumptions made by these models, and because of the role of the environment as a factor of production.