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Archive for the ‘Social Science Research Network’ Category

City Replanning

August 21, 2014 Comments off

City Replanning
Source: Social Science Research Network

In this paper we provide a new defense for one of the most criticized ideas in land use law, that city plans should constitute settled deals about the proper uses of land that should be sticky against subsequent zoning amendments. In the middle of the last century, several prominent scholars argued that courts should find zoning amendments that were contrary to city plans ultra vires. But this idea was largely rejected by courts and scholars alike, with leading figures like Carol Rose, Robert Nelson and Bill Fischel arguing that parcel-specific zoning amendments provide space for the give-and-take of democracy and lead to the efficient amount of development by encouraging negotiations between developers and residents over externalities from new building projects. Their case against plans and in favor of deals suggested that zoning authorities act either as arbiters in land use disputes or as agents for existing residents to encourage negotiated solutions.

We argue, by contrast, that the dismissal of plans was shortsighted and has helped contribute to the excessive strictness of zoning in our richest and most productive cities and regions, which has driven up housing prices excessively and produced outcomes that are economically inefficient and distributively unattractive. In contrast with both planning’s critics and supporters, we argue that plans and comprehensive remappings are best understood as deals. Plans and remappings facilitate trades between city councilmembers who understand the need for new development but refuse to have their neighborhoods be dumping grounds for all new construction. Further, by setting forth what can be constructed as of right, plans reduce the information costs borne by purchasers of land and developers, broadening the market for new construction. We argue that land use law should embrace a version of plans as a procedural tool that packages together policies and sets of zoning changes in a number of neighborhoods simultaneously through procedures that make such packages difficult to unwind.

We conclude by arguing that modern property law scholarship has failed to recognize that real property law is now substantially a public law subject and should be studied using the tools of public law. Leading scholars, most notably Tom Merrill and Henry Smith, have developed sophisticated tools for analyzing the ways in which the common law of property is designed to reduce information costs, which we employ here. But the field has ignored the fact that the common law of property is far less important than it once was as a method for regulating real property ownership and use. Legislatures and administrative agencies at a variety of levels determine most of the rules governing how real property is used and purchased. In order to understand how today’s property law increases or reduces the information costs facing owners, users, potential purchasers and third-parties to property, the field must make an “institutional turn,” studying the likely effects on policy of different institutional arrangements and procedures.

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Networks of Military Alliances, Wars, and International Trade

August 20, 2014 Comments off

Networks of Military Alliances, Wars, and International Trade
Source: Social Science Research Network

We investigate the role of networks of military alliances in preventing or encouraging wars between groups of countries. A country is vulnerable to attack if some allied group of countries can defeat the defending country and its (remaining) allies based on their collective military strengths. We show that there do not exist any networks which contain no vulnerable countries and that are stable against the pairwise addition of a new alliance as well as against the unilateral deletion of any existing alliance. We then show that economic benefits from international trade provide incentives to form alliances in ways that restore stability and prevent wars, both by increasing the density of alliances so that countries are less vulnerable and by removing the incentives of countries to attack their allies. In closing, we examine historical data on interstate wars and trade, noting that a dramatic (more than ten-fold) drop in the rate of interstate wars since 1950 is paralleled by the advent of nuclear weapons and an unprecedented growth in trade over the same period, matched with a similar densification and stabilization of alliances, consistent with the model.

Taxation Without Representation: The Illegal IRS Rule to Expand Tax Credits Under the PPACA

August 19, 2014 Comments off

Taxation Without Representation: The Illegal IRS Rule to Expand Tax Credits Under the PPACA
Source: Social Science Research Network

The Patient Protection and Affordable Care Act (PPACA) provides tax credits and subsidies for the purchase of qualifying health insurance plans on state-run insurance exchanges. Contrary to expectations, many states are refusing or otherwise failing to create such exchanges. An Internal Revenue Service (IRS) rule purports to extend these tax credits and subsidies to the purchase of health insurance in federal exchanges created in states without exchanges of their own. This rule lacks statutory authority. The text, structure, and history of the Act show that tax credits and subsidies are not available in federally run exchanges. The IRS rule is contrary to congressional intent and cannot be justified on other legal grounds. Because the granting of tax credits can trigger the imposition of fines on millions of individuals and employers, the IRS rule is likely to be challenged in court.

What Happens Before? A Field Experiment Exploring How Pay and Representation Differentially Shape Bias on the Pathway into Organizations

August 13, 2014 Comments off

What Happens Before? A Field Experiment Exploring How Pay and Representation Differentially Shape Bias on the Pathway into Organizations
Source: Social Science Research Network

Little is known about how discrimination against women and minorities manifests before individuals formally apply to organizations or how it varies within and between organizations. We address this knowledge gap through an audit study in academia of over 6,500 professors at top U.S. universities drawn from 89 disciplines and 259 institutions. We hypothesized that discrimination would appear at the informal “pathway” preceding entry to academia and would vary by discipline and university as a function of faculty representation and pay. In our experiment, professors were contacted by fictional prospective students seeking to discuss research opportunities before applying to a doctoral program. Students’ names were randomly assigned to signal gender and race, but messages were otherwise identical. Faculty ignored requests from women and minorities at a higher rate than requests from Caucasian males, particularly in higher-paying disciplines and private institutions. Counterintuitively, the representation of women and minorities and discrimination were uncorrelated.

Government Surveillance and Internet Search Behavior

August 1, 2014 Comments off

Government Surveillance and Internet Search Behavior
Source: Social Science Research Network

This paper uses data from Google Trends on search terms from before and after the surveillance revelations of June 2013 to analyze whether Google users’ search behavior shifted as a result of an exogenous shock in information about how closely their internet searches were being monitored by the U. S. government. We use data from Google Trends on search volume for 282 search terms across eleven different countries. These search terms were independently rated for their degree of privacy-sensitivity along multiple dimensions. Using panel data, our result suggest that cross-nationally, users were less likely to search using search terms that they believed might get them in trouble with the U. S. government. In the U. S., this was the main subset of search terms that were affected. However, internationally there was also a drop in traffic for search terms that were rated as personally sensitive. These results have implications for policy makers in terms of understanding the actual effects on search behavior of disclosures relating to the scale of government surveillance on the Internet and their potential effects on international competitiveness.

Decriminalizing Indoor Prostitution: Implications for Sexual Violence and Public Health

August 1, 2014 Comments off

Decriminalizing Indoor Prostitution: Implications for Sexual Violence and Public Health
Source: Social Science Research Network/National Bureau of Economic Research

Most governments in the world including the United States prohibit prostitution. Given these types of laws rarely change and are fairly uniform across regions, our knowledge about the impact of decriminalizing sex work is largely conjectural. We exploit the fact that a Rhode Island District Court judge unexpectedly decriminalized indoor prostitution in 2003 to provide the first causal estimates of the impact of decriminalization on the composition of the sex market, rape offenses, and sexually transmitted infection outcomes. Not surprisingly, we find that decriminalization increased the size of the indoor market. However, we also find that decriminalization caused both forcible rape offenses and gonorrhea incidence to decline for the overall population. Our synthetic control model finds 824 fewer reported rape offenses (31 percent decrease) and 1,035 fewer cases of female gonorrhea (39 percent decrease) from 2004 to 2009.

Performance for Pay? The Relation Between CEO Incentive Compensation and Future Stock Price Performance

July 9, 2014 Comments off

Performance for Pay? The Relation Between CEO Incentive Compensation and Future Stock Price Performance
Source: Social Science Research Network

We find evidence that CEO pay is negatively related to future stock returns for periods up to three years after sorting on pay. For example, firms that pay their CEOs in the top ten percent of excess pay earn negative abnormal returns over the next three years of approximately -8%. The effect is stronger for CEOs who receive higher incentive pay relative to their peers. Our results appear to be driven by high-pay induced CEO overconfidence that leads to shareholder wealth losses from activities such as overinvestment and value-destroying mergers and acquisitions.

Market Risk Premium Used in 88 Countries in 2014: A Survey with 8,228 Answers

July 8, 2014 Comments off

Market Risk Premium Used in 88 Countries in 2014: A Survey with 8,228 Answers
Source: Social Science Research Network

This paper contains the statistics of the Equity Premium or Market Risk Premium (MRP) used in 2014 for 88 countries. We got answers for more countries, but we only report the results for 88 countries with more than 6 answers.

37% of the MRP used in 2014 decreased (vs. 2013) and 9% increased.

Most previous surveys have been interested in the Expected MRP, but this survey asks about the Required MRP. The paper also contains the references used to justify the MRP, comments from 30 persons that do not use MRP, and comments from 53 persons that do use MRP.

Simulation in Sport Finance

July 2, 2014 Comments off

Simulation in Sport Finance
Source: Social Science Research Network

Simulations have long been used in business schools to give students experience making real-world decisions in a relatively low risk environment. The OAKLAND A’S BASEBALL BUSINESS SIMULATOR takes a traditional business simulation and applies it to the sport industry, in which sales of tangible products are replaced by sales of experiences provided to fans. The simulator asks students to make decisions about prices for concessions, parking, and merchandise; player payroll expenses; funding for a new stadium; and more. On the basis of these inputs, the program provides detailed information about the state of the franchise after each simulated year, including attendance, winning percentage, revenues versus expenses, revenue sharing, and stadium financing. The use of simulations such as this one enhances students’ organizational skills and students’ ability to think critically and imaginatively about the data while applying relevant knowledge and an appropriate strategy to achieve the best possible results. This is particularly important in the field of sport management, in which few, if any, other simulators exist that are specific to the field.

The Effect of Patent Litigation and Patent Assertion Entities on Entrepreneurial Activity

June 27, 2014 Comments off

The Effect of Patent Litigation and Patent Assertion Entities on Entrepreneurial Activity
Source: Social Science Research Network

This paper empirically investigates the statistical relation between levels of patent litigation and venture capital (“VC”) investment in the U.S. We find that VC investment, a major funding source for entrepreneurial activity, initially increases with the number of litigated patents, but that there is a “tipping point” where further increases in the number of patents litigated are associated with decreased VC investment, which suggests an inverted U-shaped relation between patent litigation and VC investment. This appears strongest for technology patents, and negligible for products such as pharmaceuticals. There is some evidence of a similar inverted U-shaped relation between patent litigation and the creation of new small firms. Strikingly, we find evidence that litigation by frequent patent litigators, a proxy for PAE litigation, is directly associated with decreased VC investment with no positive effects initially.

Hat tip: ResearchBuzz.

Not an ‘Ebay for Drugs': The Cryptomarket ‘Silk Road’ as a Paradigm Shifting Criminal Innovation

June 6, 2014 Comments off

Not an ‘Ebay for Drugs': The Cryptomarket ‘Silk Road’ as a Paradigm Shifting Criminal Innovation
Source: Social Science Research Network

The online cryptomarket Silk Road has been oft-characterised as an ‘eBay for drugs’ with customers drug consumers making personal use-sized purchases. Our research demonstrates that this was not the case. Using a bespoke web crawler, we downloaded all drugs listings on Silk Road in September 2013. We found that a substantial proportion of transactions on Silk Road are best characterised as ‘business-to-business’, with sales in quantities and at prices typical of purchases made by drug dealers sourcing stock. High price-quantity sales generated between 31-45% of revenue, making sales to drug dealers the key Silk Road drugs business. As such, Silk Road was what we refer to as a transformative, as opposed to incremental, criminal innovation. With the key Silk Road customers actually drug dealers sourcing stock for local street operations, we were witnessing a new breed of retail drug dealer, equipped with a technological subcultural capital skill set for sourcing stock. Sales on Silk Road increased from an estimate of $14.4 million in mid 2012 to $89.7 million by our calculations. This is a more than 600% increase in just over a year, demonstrating the demand for this kind of illicit online marketplace. With Silk Road functioning to considerable degree at the wholesale/broker market level, its virtual location should reduce violence, intimidation and territorialism. Results are discussed in terms of the opportunities cryptomarkets provide for criminologists, who have thus far been reluctant to step outside of social surveys and administrative data to access the world of ‘webometric’ and ‘big data’.

Profiting from Machine Learning in the NBA Draft

June 3, 2014 Comments off

Profiting from Machine Learning in the NBA Draft
Source: Social Science Research Network

I project historical NCAA college basketball performance to subsequent NBA performance for prospects using modern machine learning techniques without snooping bias. I find that the projections would have helped improve the drafting decisions of virtually every team: over the past ten years, teams forfeited an average of about $90,000,000 in lost productivity that could have been theirs had they followed the recommendations of the model. I provide team-by-team breakdowns of who should have been drafted instead, as well as team summaries of lost profit, and draft order comparison. Far from being just another input in making decisions, when used properly, advanced draft analytics can effectively be an additional revenue source in a team’s business model.

The Legal Academy Under Erasure

May 26, 2014 Comments off

The Legal Academy Under Erasure
Source: Social Science Research Network

We hear much about the crisis in legal education: high tuition costs, steep declines in law school enrollment, and graduates unprepared for practice who cannot find jobs. Proposals to address the crisis appear to enjoy wide support and may be poised to dramatically change the landscape of legal education. Such reforms will harm law students and the legal profession, placing the legal academy “under erasure,” by: (1) reorienting it from an academically-grounded education towards vocational training, (2) requiring just two years of study for the J.D. degree, (3) allowing graduates of non-ABA accredited law schools to sit for the bar examination, thereby rendering accreditation a toothless mechanism for ensuring academic quality, and (4) gutting faculty scholarship.

Instead, we must make the value of legal education worth its cost by doing a better job of educating and training our students. Legal education is broken because it fails to prepare students for the demands of modern law practice, which is more complex and interdisciplinary than ever before. We need a three-year program that is more robust, one that teaches the core first-year subjects as well as applications of other disciplines (e.g., accounting, economics, psychology) to everyday law practice, exposes students to a reasonable range of specialty areas, and integrates skills training (e.g., client counseling, advocacy, drafting) throughout the curriculum. To accomplish these goals, we should adapt the medical school model to legal education. This would entail a curriculum that provides a comprehensive foundation in basic legal subjects and legally relevant other disciplines, culminating in a series of clinical rotations where the basic doctrinal and interdisciplinary knowledge is applied in practice. I also explain why we should not gut support for faculty scholarship in the hopes that doing so will cut costs and encourage professors to focus on teaching. Contrary to popular claims, engaged scholars are better teachers, and legal scholarship can contribute meaningfully and substantially (though often in ways not readily apparent) to law practice and legal reform efforts. Finally, I suggest that we address the employment problem and improve educational quality by having fewer but better law schools, producing fewer attorneys.

The Role of the Corporation in Society: An Alternative View and Opportunities for Future Research

May 23, 2014 Comments off

The Role of the Corporation in Society: An Alternative View and Opportunities for Future Research
Source: Social Science Research Network

A long-standing ideology in business education has been that a corporation is run for the sole interest of its shareholders. I present an alternative view where increasing concentration of economic activity and power in the world’s largest corporations, the Global 1000, has opened the way for managers to consider the interests of a broader set of stakeholders rather than only shareholders. Having documented that this alternative view better fits actual corporate conduct, I discuss opportunities for future research. Specifically, I call for research on the materiality of environmental and social issues for the future financial performance of corporations, the design of incentive and control systems to guide strategy execution, corporate reporting, and the role of investors in this new paradigm.

Dark Sarcasm in the Classroom: The Failure of the Courts to Recognize Students’ Severe Emotional Harm as Unconstitutional

May 22, 2014 Comments off

Dark Sarcasm in the Classroom: The Failure of the Courts to Recognize Students’ Severe Emotional Harm as Unconstitutional
Source: Social Science Research Network

Sometimes the very people who are supposed to teach, nurture, and protect students in public schools — the students’ teachers, principals, coaches, and other school officials — are instead the people who harm them. Public school officials have beaten students, causing significant physical harm. They have also left students suffering from depression, suicidal ideation, and Post-Traumatic Stress Disorder. When school officials cause such severe harm to students, all the federal courts of appeals to consider the issue have concluded that the Fourteenth Amendment at least in theory protects them, regardless of whether the form of the harm is emotional or physical. Yet, an analysis of the cases across the circuits reveals that the courts have yet to actually find that a case of severe emotional harm on its own violates the Constitution, even though they have been willing to find physical harm unconstitutional. Not only do the courts not find stand-alone emotional harm sufficient to make out a constitutional violation, they also collectively evaluate students’ emotional harm very differently than their physical harm.

This Article explores the distinction in the way the courts treat standalone emotional harm in public school students’ Fourteenth Amendment cases. It contends that if the courts are going to recognize that the Constitution protects students from severe harm regardless of its physical or emotional form, as they do, then the distinction in treatment of emotional harm is untenable. Drawing on substantive due process theory, psychology, and law and emotions theory, this Article argues that the distinction in treatment is the result of emotions stigma, analogous to the long-recognized phenomenon of mental illness stigma, that discredits students’ emotions-based claims. It proposes a paradigm for evaluating students’ emotional harm that responds to and helps to overcome emotions stigma so the Constitution will protect students when school officials cause them severe emotional harm.

Sentencing in Tax Cases after Booker: Striking the Right Balance between Uniformity and Discretion

May 22, 2014 Comments off

Sentencing in Tax Cases after Booker: Striking the Right Balance between Uniformity and Discretion
Source: Social Science Research Network

It has been nearly ten years since the Supreme Court’s seminal decision in United States v. Booker, in which the Court invalidated the mandatory application of the United States Sentencing Guidelines. In the cases that followed, the Court addressed subsidiary issues regarding the application of the Guidelines and the scope of appellate review. However, despite — or perhaps because of — these opinions, there is little consensus regarding the status and extent of appellate review, as well as the discretion afforded sentencing courts. More troubling, what consensus there is seems to permit judges to impose any sentence they wish, as long as the appropriate sentencing procedures are followed. As a result, we are in danger of returning to “the shameful lack of parity, which the Guidelines sought to remedy.”

The Sentencing Reform Act and the Sentencing Guidelines were designed to reduce disparity in sentencing and to reign in what one commentator described as a “lawless system.” However, the Guidelines as ultimately conceived drastically limited the sentencing judge’s ability to impose a sentence that was appropriate for the conduct and culpability of the defendant, creating a different kind of sentencing disparity. The current, post-Booker system provides more guidance than the pre-Guidelines system, but permits sentencing judges to disregard the Guidelines and develop their own sentencing policy. As a result, rather than having a system that allows for sentences to be tailored to individual defendants, the current system allows sentences to be imposed based on the penal philosophy of individual judges. This will inevitably lead to unwarranted sentencing disparity.

This article traces the recent history of criminal sentencing and, relying on the influential works of John Rawls and H.L.A. Hart on theories of punishment, argues for a better system that allows for both guidance to sentencing judges and appropriately individualized sentencing. My recommendation, although equally applicable to any federal sentence, will be examined through the lens of tax sentencing.

The Contaminating Effects of Building Instrumental Ties: How Networking Can Make Us Feel Dirty

May 16, 2014 Comments off

The Contaminating Effects of Building Instrumental Ties: How Networking Can Make Us Feel Dirty (PDF)
Source: Social Science Research Network

To create social ties to support their professional or personal goals, people actively engage in instrumental networking. Drawing from moral psychology research, we posit that this intentional behavior has unintended consequences for an individual’s morality. Unlike personal networking in pursuit of emotional support or friendship, and unlike social ties that emerge spontaneously, instrumental networking in pursuit of professional goals can impinge on an individual’s moral purity — a psychological state that results from viewing the self as clean from a moral standpoint — and make an individual feel dirty. We theorize that such feelings of dirtiness decrease the frequency of instrumental networking and, as a result, work performance. We also examine sources of variability in networking-induced feelings of dirtiness by proposing that the amount of power people have when they engage in instrumental networking influences how dirty this networking makes them feel. Three laboratory experiments and a survey study of lawyers in a large North American law firm provide support for our predictions. We call for a new direction in network research that investigates how network-related behaviors associated with building social capital influence individuals’ psychological experiences and work outcomes.

What Happens Before? A Field Experiment Exploring How Pay and Representation Differentially Shape Bias on the Pathway into Organizations

May 14, 2014 Comments off

What Happens Before? A Field Experiment Exploring How Pay and Representation Differentially Shape Bias on the Pathway into Organizations
Source: Social Science Research Network

Little is known about how discrimination against women and minorities manifests before individuals formally apply to organizations or how it varies within and between organizations. We address this knowledge gap through an audit study in academia of over 6,500 professors at top U.S. universities drawn from 89 disciplines and 259 institutions. We hypothesized that discrimination would appear at the informal “pathway” preceding entry to academia and would vary by discipline and university as a function of faculty representation and pay. In our experiment, professors were contacted by fictional prospective students seeking to discuss research opportunities prior to applying to a doctoral program. Names of students were randomly assigned to signal gender and race (Caucasian, Black, Hispanic, Indian, Chinese), but messages were otherwise identical. We found that faculty ignored requests from women and minorities at a higher rate than requests from Caucasian males, particularly in higher-paying disciplines and private institutions. Counterintuitively, the representation of women and minorities and discrimination were uncorrelated, suggesting that greater representation cannot be assumed to reduce discrimination. This research highlights the importance of studying what happens before formal entry points into organizations and reveals that discrimination is not evenly distributed within and between organizations.

What Happens Before? A Field Experiment Exploring How Pay and Representation Differentially Shape Bias on the Pathway into Organizations

May 9, 2014 Comments off

What Happens Before? A Field Experiment Exploring How Pay and Representation Differentially Shape Bias on the Pathway into Organizations
Source: Social Science Research Network

Little is known about how discrimination against women and minorities manifests before individuals formally apply to organizations or how it varies within and between organizations. We address this knowledge gap through an audit study in academia of over 6,500 professors at top U.S. universities drawn from 89 disciplines and 259 institutions. We hypothesized that discrimination would appear at the informal “pathway” preceding entry to academia and would vary by discipline and university as a function of faculty representation and pay. In our experiment, professors were contacted by fictional prospective students seeking to discuss research opportunities prior to applying to a doctoral program. Names of students were randomly assigned to signal gender and race (Caucasian, Black, Hispanic, Indian, Chinese), but messages were otherwise identical. We found that faculty ignored requests from women and minorities at a higher rate than requests from Caucasian males, particularly in higher-paying disciplines and private institutions. Counterintuitively, the representation of women and minorities and discrimination were uncorrelated, suggesting that greater representation cannot be assumed to reduce discrimination. This research highlights the importance of studying what happens before formal entry points into organizations and reveals that discrimination is not evenly distributed within and between organizations.

Morality Rebooted: Exploring Simple Fixes to Our Moral Bugs

May 8, 2014 Comments off

Morality Rebooted: Exploring Simple Fixes to Our Moral Bugs
Source: Social Science Research Network

Ethics research developed partly in response to calls from organizations to understand and solve unethical behavior. Departing from prior work that has mainly focused on examining the antecedents and consequences of dishonesty, we examine two approaches to mitigating unethical behavior: (1) values-oriented approaches that broadly appeal to individuals’ preferences to be more moral, and (2) structure-oriented approaches that redesign specific incentives, tasks, and decisions to reduce temptations to cheat in the environment. This paper explores how these approaches can change behavior. We argue that integrating both approaches while avoiding incompatible strategies can reduce the risk of adverse effects that arise from taking a single approach.

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