Can racially unbiased police perpetuate long-run discrimination?

We develop a stylized dynamic model of highway policing in which a non-racist police officer exhibits a cognitive bias: relative overconfidence. The officer is given incentives to arrest criminals but faces a per stop cost that increases when the racial mix of her stops differs from that of the population. By observing the racial composition of jail inmates, she estimates crime rates of each race. Her overconfidence regarding eventual incarceration of criminals is shown to lead her to overestimate the crime rate of one race causing the long-run racial composition of the jail population to deviate from the “fair” one.     

Information Sharing and Oligopoly in Agricultural Markets: The Role of the Cooperative Bargaining Association

We study incentives for information sharing among agricultural intermediaries in imperfectly competitive markets for farm output. Information sharing always increases expected grower and total surplus, but may reduce expected intermediary profits. Even when expected profits increase with information sharing, intermediary firms face a prisoner's dilemma where it is privately rational to withhold information, given that other firms report truthfully. This equilibrium can be avoided if firms' information reports are verifiable, and if firms commit to an ex ante contract that enforces participation in information sharing. We show how agricultural bargaining legislation can implement such a contract with the bargained farm price representing a sufficient statistic of all information held by intermediary firms.     

Grader Bias in Cattle Markets? Evidence from Iowa

Live cattle are increasingly priced as an explicit function of U.S. Department of Agriculture yield and quality grades. Human graders visually inspect each slaughtered carcass and call grades in a matter of seconds as the carcass passes on a moving trolley. We examine whether there is systematic bias in grade calls using a sample of loads delivered to three different midwestern packing plants during 2000–2002. Overall, results indicate that indeed there is a bias, and that grading standards vary significantly across packing plants. Results also are consistent with a behavioral model where graders are more accurate when grading relatively low-quality carcasses.     

Agents Monitoring Their Manager: A Hard‐Times Theory of Producer Cooperation

We model the producer cooperative as a firm where a single class of individuals supplies an essential input and monitors managerial behavior. We show how this contractual structure reduces the incidence of equilibrium credit rationing, even assuming a cost disadvantage relative to a firm where these roles are specialized. Our model provides an explanation for producer and worker buyouts in the face of exit by investor owners, and, more generally, for cooperative entry in low‐return economic environments not serviced by investor‐financed firms. Further, our model predicts that a cooperative firm is less prone to monitor‐manager collusion, and that it monitors excessively in high‐return environments.     

Subjective performance of patent examiners,implicit contracts,and self‐funded patent offices

Self‐funded patent offices should be concerned with patent quality (patents should be granted to only deserving innovations) and quantity (as revenues come from fees paid by applicants). In this context, we investigate what is the impact of the self‐funded constraint on different bonus contracts and how these contracts affect the examiners' incentive to prosecute patent applications. We consider contracts in which a patent office offers bonuses on quantity quotas (explicit contract) and on quality outcome (either an implicit contract or an explicit contract based on a quality proxy). We find that a self‐funded constrained agency should make different organization choices of incentives. For a low quality proxy precision, an agency facing a tight budget operates well with implicit contracts. However, by only relaxing moderately the budget constraint, the agency might be worse off simply because this will preclude implicit contracts. Only very large patenting fees might allow the agency to compensate for the loss of implicit contracts.     

REMOVING THE “VEIL OF IGNORANCE”: NONLINEARITIES IN EDUCATION EFFECTS ON GENDER WAGE INEQUALITIES

A large literature studies the mean gender wage gap in developing countries and finds mixed evidence about the role of education policies in closing gender earnings inequalities. We contribute to this literature by exploring two types of nonlinearities in wage earning regressions: (1) nonlinearities on the effects of education on expected earnings along the distribution of education endowments; and (2) heterogeneities on the contributions of education to the gender wage gap at different quantiles of the wage distribution. Our analyses provide new insights on how these nonlinear effects can be used to set up better targeted gender and development policies. (JEL I26, C14)     

Intrahousehold moral hazard frictions and household poverty traps in rural India

We empirically study the role of assets held by women in the creation of household wealth using data from rural India. We design a streamlined model of intrahousehold project funding where moral hazard frictions between spouses and women's asset control are the main ingredients. As predicted by the model, the data show that household asset accumulation depends on women's asset control in a non-monotonic way. Results indicate no presence of multiple equilibrium poverty traps, but do show that exogenous negative shocks will trigger assets aggregation within households where both spouses are present. This resilience mechanism is, however, not found in female headed household as these households have a monotonic relationship between women's wealth control and asset creation. We thus argue that policies to support women's empowerment need to distinguish women based on their individual wealth levels and headship status to enhance household well-being in remote Indian communities.