Paper # Author Title  
We study a dynamic moral hazard model where the agent does not fully observe his performance. We consider the incentive effects of providing feedback to the agent: revealing to the agent how well he is doing. We show that, if the incentive scheme is exogenously given, there is a wide range of cases where the agent works harder if feedback is provided. However, the agent earns more money in this scenario. We then characterize the optimal incentive schemes in the two scenarios and we show that the principal is better off if feedback is not provided; the expected cost of inducing any given level of expected effort is lower in the no-revelation scenario. Download Paper
Citizens of two racial groups choose whether to engage in illegal activities, and police audit citizens. Citizens are heterogeneous according to legal earning opportunities, which are distributed differently across groups. We define fairness of policing as policing groups with the same intensity, and effectivenesss of interdiction as reducing the amount of crime. We show that sometimes, forcing the police to behave more fairly can increase effectiveness of interdiction, and give exact conditions under which this is so. These conditions are based on the distributions of legal earning opportunities in the two groups, and are expressed as contraints on the QQ plot of these distributions. Legal earning opportunities are not observable for those citizens who become criminals. However, we give conditions under which the QQ plot of legal earning opportunities equals the QQ plot based on reported income distributions (which are observable). We also discuss whether our notion of fairness is meaningful when the cost of being searched reflects the shame of being singled out by the police. Download Paper
According to the conventional view, in politics, just as in economic markets, competition between politicians is a force that pushes towards efficiency. We provide a model that challenges this view. In the model, candidates can promise to provide a public good or to engage in redistributive politics. We show that the more intense is competition (measured by an increase in the number of candidates) the greater the inefficiency. This is because the tendency to focus on policies that provide particularistic benefits increases with the number of candidates at the expense of policies that benefit the population at large. We also examine the impact of voters’ ideology, participation, and information on the efficiency of the electoral process, by allowing for heterogeneity in voters’ responsiveness to electoral promises. The larger the fraction of non-responsive voters, the less efficient the political process. This is because electoral competition focuses on swing voters, increasing the value of policies with targetable benefits. Download Paper
African American motorists in the United States are more likely than white motorists to have their cars searched by police checking for illegal drugs and other contraband. The courts are faced with the task of deciding on the basis of traffic-stop data whether police are basing their decisions to stop cars on the race of the driver. We develop a model of law enforcement for a popula- tion with two racial types who also differ along other dimensions relevant to criminal behavior. We discuss why a simple test commonly applied by the courts is inadequate when the econometrician observes only a subset of the characteristics observed by the policemen. Next, we show how to construct a test for whether differential treatment is motivated purely out of efficiency grounds, i.e. to maximize the number of arrests, or rejects racial prejudice. The test is valid even when the set of characteristics observed by the police- men are only partially observable by the econometrician. We apply the tests for discrimination to traffic stop data from Maryland. Finally, we present a simple analysis of the tradeoff between efficiency and fairness. Download Paper
We discuss a fundamental trade-off in the political process that can lead to inefficient provision of public goods: politicians may not offer to provide socially desirable public goods because the benefits of the public good cannot be targeted to voters as easily as pork barrel spending. We study how this inefficiency is affected by alternative ways of conducting elections. We first compare a winner-take-all system with a proportional system. We then contrast two different ways of electing politicians to nationwide offices: one is majority rule, the other is the system used in U.S. presidential elections: the electoral college. Download Paper