Spring 2024 Workshop

Feb. 5, 2024 (Mon)
4:20 – 6:10 PM

Manisha Padi

Assistant Professor of Law
University of California Berkeley Law School

Presentation (in-person only) will be in Jerome Greene Annex.

The Rise of Non-Banks in Servicing Household Debt

Servicing rights have become increasingly separated from the financing and origination of loans and are traded after being assigned to the initial servicers. Using a near universe of consumer credit records, we document novel facts about the allocation of mortgage servicing rights (MSRs) and identify the effect of MSR capital regulation on their allocation to servicers. We show that banks are more likely to allocate MSRs to non-banks following increased regulatory cost of holding MSRs, with more transfers of MSRs on subprime and delinquent loans. Our model rationalizes these findings and demonstrates how servicing rights traded in a private market can be allocated to servicers facing agency conflicts, causing welfare losses to borrowers and investors. Our empirical findings support this theoretical argument: loans impacted by the regulatory change have higher foreclosure rates, driven in part by re-allocation to non-banks who foreclose more aggressively than optimal for either borrowers or investors. The results suggest that Basel III’s MSR rules decreased social welfare by re-allocating MSRs to conflicted servicers, with the largest negative effects on subprime borrowers.

Feb 12, 2024 (Mon)
4:20 – 6:10 PM

Colleen Honigsberg

Associate Dean of Curriculum
Professor of Law
Stanford Law School

Presentation (in-person only) will be in Jerome Greene Annex.

Regulatory Leakage Among Financial Advisors:
Evidence From FINRA Regulation of “Bad” Brokers

We create a single database containing four categories of financial advisors: (1) brokers regulated primarily by FINRA, (2) investment advisers regulated by the SEC, (3) investment advisers regulated primarily by state regulators, and (4) insurance producers. There is significant overlap across the categories; more than 40% of the advisors are registered with more than one regulator. We examine how this regulatory fragmentation intersects with regulatory discipline by studying two FINRA rules designed to nudge “bad” brokers out of FINRA’s regulatory regime. Although the rules caused thousands of high-risk brokers to exit the FINRA broker regime, 98% of those who exited are currently registered with state regulators as insurance producers.

Feb. 26, 2024 (Mon)
4:20 – 6:10 PM

Yun-chien Chang

Jack G. Clarke Professor in East Asian Law
Cornell Law School

Presentation will be in Case Lounge (Jerome Greene Hall, room 701).

Familiarity Breeds Contempt or Deference?
An Empirical Study of Appellate Judicial Panels

Several studies have highlighted the role of familiarity, alongside collegiality, in influencing judicial behaviors within U.S. federal courts. Nevertheless, the unique characteristics of the U.S. judicial system may not always provide the most suitable context for exploring the presence of cognitive biases. This study leverages a comprehensive dataset of 84,335 appellate court decisions on civil cases in Taiwan to investigate the effects of familiarity within a career judge system. Unlike the U.S., Taiwanese lower court judges undergo a process of temporary promotion to appellate courts for three years before returning to district courts for additional tenure. By analyzing the judicial conduct during their initial and subsequent promotions and comparing it with the behavior of permanent appellate judges, we uncover similar biases among Taiwanese judges as those documented in existing literature. The substantial size and diversity of our dataset, coupled with the random assignment of court cases in Taiwan, reinforce the argument that judicial biases are prevalent and consistent across different legal systems. Furthermore, we delineate two specific sources of familiarity, clearly differentiating them from collegiality, thereby contributing to a deeper understanding of the nuances influencing judicial decision-making.

March 4, 2024 (Mon)
4:20 – 6:10 PM

Pat Akey

Associate Professor of Finance
Department of Management
University of Toronto Mississauga

Presentation will be in Case Lounge (Jerome Greene Hall, room 701).

The Impact of Money in Politics on Labor and Capital:
Evidence from Citizens United v. FEC

We examine whether corporate money in politics benefits or hurts labor using the 2010 Supreme Court ruling Citizens United, which rendered bans on political election spending unconstitutional. In difference-in-difference analyses, affected states experience increases in both capital and labor income relative to unaffected states. We find evidence consistent with increased political spending spurring political competition and the adoption of pro-growth policies. These policies benefit a broader set of constituents as we find a broad-based increase in labor income. Affected states see increased political turnover and reduced regulatory burdens. The economic effects are stronger among ex-ante politically inactive and younger firms.

March 25, 2024 (Mon)
4:20 – 6:10 PM

Aniket Kesari

Associate Professor of Law
Fordham Law School

Presentation will be in Case Lounge (Jerome Greene Hall, room 701).

Translating Legalese: Enhancing Public Understanding of Court Opinions with Legal Summarizers

The Supreme Court has been described as an “exemplar of public reason.” Judicial opinions are written to be persuasive and could build public trust in court decisions. Yet they can be difficult for non-experts to understand, thus undermining their legitimizing quality. We present a pipeline for using an AI assistant to generate simplified summaries of judicial opinions. Compared to existing expert-written summaries, these AI-generated simple summaries are more accessible to the public and more easily understood by non-experts. We show in a survey experiment that the AI summaries help respondents understand the key features of a ruling, and have higher perceived quality, especially for respondents with less formal education. In a second survey experiment measuring short-term attitude changes toward the Court, we find that respondents exposed to AI-generated Supreme Court summaries are more likely to agree with the Court’s reasoning on certain issues such as abortion and social security benefits. We also find that respondents are unlikely to change their attitudes about the Court’s legitimacy, but are more likely to express their views in legal arguments.

April 1, 2024 (Mon)
4:20 – 6:10 PM

Shengwu Li

Associate Professor
Department of Economics
Harvard University

Presentation will be in Case Lounge (Jerome Greene Hall, room 701).

What's My Employee Worth?
The Effects of Salary Benchmarking

Firms are allowed to use aggregate data on market salaries to set pay, a practice known as salary benchmarking. Using national payroll data, we study firms that gain access to a tool that reveals market benchmarks for each job title. Using a difference-indifferences design, we find that the benchmark information reduces salary dispersion by 25%. Thus, salary dispersion must stem partly from aggregate uncertainty about the salaries offered by other firms. Our model formalizes how salary dispersion can arise even in competitive labor markets for identical workers when such uncertainty exists, and we discuss implications for an ongoing policy debate.

April 15, 2024 (Mon)
4:20 – 6:10 PM

Evan Starr

Associate Professor
Robert H. Smith School of Business
University of Maryland

Presentation will be in Case Lounge (Jerome Greene Hall, room 701).

Clause and Effect:
A Field Experiment on Noncompete Clauses,
Knowledge Flows, Job Mobility, and Wages

Coauthors: 
Bo Cowgill (Columbia University)
Brandon Freiberg (Columbia University)

We study the effects of employer noncompete clauses in a two-firm field experiment about hiring and job performance, as well as post-separation mobility, secret-sharing, and income. We find that receiving a job offer with a noncompete is associated with earnings losses six months later, even when noncompetes are salient in the hiring process. This effect occurs because workers are more likely to reject offers containing noncompetes, and because those who sign them are less likely to take future jobs while under the noncompete. We find no evidence that noncompetes reduce secret sharing compared to NDAs.

The manuscript, an early draft, is not posted at the authors' request.
The CLS Law & Economics email group will receive the paper by Friday 4/12.
Attendees may also email [email protected] to request the draft. 

April 22, 2024
4:20 – 6:10 PM

Joshua C. Teitelbaum

David Belding Professor of Law
Professor of Economics (by courtesy)
Georgetown Law School

Presentation will be in Case Lounge (Jerome Greene Hall, room 701).

The Law of General Average

Part of a ship’s cargo is jettisoned in order to save the vessel and the remaining cargo from imminent peril. How should the loss be shared among the cargo owners? The law of general average, an ancient principle of maritime law, prescribes that the owners  share the loss proportionally according to the respective values of their cargo. We analyze whether the law of general average is a truthful and efficient mechanism. That is, we investigate whether it induces truthful reporting of cargo values and yields a Pareto efficient  allocation in equilibrium. We show that the law of general average is neither truthful nor efficient if owners have expected utility preferences, but is both truthful and efficient if owners have maxmin utility preferences. We discuss why maxmin behavior may be reasonable in the general average context.