Fragile markets: An experiment on judicial independence

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• dc.contributor.author Arruñada, Benitoca
• dc.contributor.author Casari, Marcoca
• dc.contributor.other Universitat Pompeu Fabra. Departament d'Economia i Empresa
• dc.date.accessioned 2017-07-26T10:50:04Z
• dc.date.available 2017-07-26T10:50:04Z
• dc.date.issued 2007-04-01
• dc.date.modified 2017-07-23T02:11:02Z
• dc.description.abstract Contract enforcement does not only affect single transactions but the market as a whole. We compare alternative institutions that allocate enforcement rights to the different parties to a credit transaction: either lenders, borrowers, or judges. Despite all parties having incentives to enforce and transact, the market flourishes or disappears depending on the treatment: paying judges according to lenders' votes maximizes total surplus and equity; and a similar result appears when judges are paid according to average earnings in society. In contrast, paying judges according to borrowers' votes generates the poorest and most unequal society. These results suggest that parties playing the role of borrowers understand poorly the systemic consequences of their decisions, triggering under-enforcement, and hence wasting profitable trade opportunities.
• dc.format.mimetype application/pdfca
• dc.identifier https://econ-papers.upf.edu/ca/paper.php?id=1031
• dc.identifier.citation Journal of Economic Behavior and Organization, Forthcoming
• dc.identifier.uri http://hdl.handle.net/10230/649
• dc.language.iso eng
• dc.relation.ispartofseries Economics and Business Working Papers Series; 1031
• dc.rights L'accés als continguts d'aquest document queda condicionat a l'acceptació de les condicions d'ús establertes per la següent llicència Creative Commons
• dc.rights.accessRights info:eu-repo/semantics/openAccess
• dc.rights.uri http://creativecommons.org/licenses/by-nc-nd/3.0/es/
• dc.subject.keyword impersonal exchange
• dc.subject.keyword third-party enforcement
• dc.subject.keyword steps of reasoning
• dc.subject.keyword other-regarding preferences
• dc.subject.keyword judicial independence.
• dc.subject.keyword Behavioral and Experimental Economics
• dc.subject.keyword Business Economics and Industrial Organization
• dc.title Fragile markets: An experiment on judicial independenceca
• dc.type info:eu-repo/semantics/workingPaper