Convictions versus Conviction Rates: The Prosecutor's Choice

It is natural to suppose that a prosecutor's conviction rate—theratio of convictions to cases prosecuted—is a sign ofhis competence. Prosecutors, however, choose which cases toprosecute. If they prosecute only the strongest cases, theywill have high conviction rates. Any system that pays attentionto conviction rates, as opposed to the number of convictions,is liable to abuse. As a prosecutor's budget increases, he allocatesit between prosecuting more cases and putting more effort intoexisting cases. Either can be socially desirable, dependingon particular circumstances. We model the tradeoffs theoreticallyin two models, one of a benevolent social planner and one ofa prosecutor who values not just the number of convictions butthe conviction rate and unrelated personal goals. We apply themodel to U.S. data drawn from county-level crime statisticsand a survey of all state prosecutors by district. Convictionrates do have a small negative correlation with prosecutorialbudgets, but conditioning on other variables in regression analysis,higher budgets are associated both with more prosecutions andhigher conviction rates.     

Agency Law and Contract Formation

Various issues in the common law arise when agents make contractson behalf of principals. Should a principal be bound when hisagent makes a contract on his behalf that he would immediatelywish to disavow? The tradeoffs resemble those in tort, so theleast-cost avoider principle is useful for deciding which agreementsare binding and can unify a number of different doctrines inagency law. In particular, an efficiency explanation can befound for the undisclosed-principal rule, under which the agent'sagreement binds the principal even when the third party withwhom the contract is made is unaware that the agent is actingas an agent.     

Lobbying when the decisionmaker can acquire independent information

Politicians trade off the cost of acquiring and processing information against the benefit of being re-elected. Lobbyists may possess private information upon which politicians would like to rely without the effort of verification. If the politician does not try to verify, however, the lobbyist has no incentive to be truthful. This is modelled as a game in which the lobbyist lobbies to show his conviction that the electorate is on his side. In equilibrium, sometimes the politician investigates, and sometimes the information is false. The lobbyists and the electorate benefit from the possibility of lobbying when the politician would otherwise vote in ignorance, but not when he would otherwise acquire his own information. The politician benefits in either case. Lobbying is most socially useful when the politician's investigation costs are high, when he is more certain of the electorate's views, and when the issue is less important.     

Choosing among signalling equilibria in lobbying games: A reply to Sloof

Randolph Sloof has written a comment on the lobbying-as-signalling model in Rasmusen (1993) in which he points out an equilibrium I missed and criticizes my emphasis on a particular separating equilibrium (see this issue). In this response, I discuss how to interpret multiple equilibria in games and how to interpret mixed strategy equilibria in which two types of player with identical incentives must pick different mixing probabilities.     

Cheap bribes and the corruption ban: A coordination game among rational legislators

Legislators in modern democracies (a) accept bribes that are small compared to the value of the statutes they pass and (b) allow bans against bribery to be enforced. In our model of bribery, rational legislators accept bribes smaller not only than the benefit the briber receives but than the costs the legislators incur in accepting the bribes. Rather than risk this outcome, the legislators may be willing to suppress bribery altogether. The size of legislatures, the quality of voter information, the nature of party organization, and the structure of committees will all influence the frequency and size of bribes.     

Extending the economic theory of regulation to the form of policy

The mutually beneficial connection between industries and the governments that regulate them is the subject of a large literature led by Stigler (1971). What has not been studied is how firms choose their desired policies from the set including entry barriers, price floors, subsidies, and demand stimulation. We take as given that government and incumbents from the supply and demand for regulation and explore the choice of political product.     

Observed choice and optimism in estimating the effects of government policies

A policy will be used more heavily in a time and place where its cost is lower. The analyst who treats times and places as identical will overestimate the policy's net benefit, especially for policy intensities greater than exist in his sample. In regression analysis, the problem can be solved by instrumental variables. Using state-level data, the technique substantially increases the estimated responsiveness of illegitimacy to transfers.