Luis Frones

Publications

1. Speak or Wait: Strategic Delay and the Value of Public Information, Economics Letters, 2025. 

Proofs omitted from the paper and the intermediate public-signal precision case are provided here.

2. International Trade and Forced Labor (with Facundo Albornoz, Matthias Dahm and Todd Landman), Economics and Politics, 2025.

Working Papers

Why do apology laws fail (with Daniel Seidmann) (submitted)

Apology laws, which exclude evidence of an apology from trial, were widely introduced to reduce litigation. The evidence shows, rather, that these laws have been counterproductive: increasing litigation, primarily by discouraging plaintiffs from dropping their claims. We explain this evidence by extending settlement negotiation models to allow the plaintiff to quit at any stage and by introducing defendants who care about their future relationship with the plaintiff. Apology laws oversubsidize apologies, preventing any defendant type from credibly signaling via an apology; and no plaintiff type then quits before trial.

Waiting for others: Long delays in social learning (submitted)

Does waiting to observe others’ action delay profitable choices? If so, for how long? We characterize long delays in a social learning environment. In contrast with previous work, we show the existence of equilibria in which agents end up adopting a profitable and risky policy with substantial delay. These results point to social learning as a plausible explanation for delays evidenced in the adoption of policy measures during the Covid-19 pandemic. Next, we allow agents to choose the quality of their information before deciding. We show how in this setting long delays may also exists, and how our equilibrium sheds light on the investment timing patterns evidenced in the venture capital industry.

Segregation and Beliefs in a Just World

Recent evidence shows a negative association between social mobility and residential segregation based on income. In this paper we provide a theory that explains this link based on beliefs in a just world. Our argument is that segregated communities exhibit more polarized and pessimistic views that hard work pays off than integrated ones because families in those communities learn differently about the value of effort. This polarization and pessimism in segregated communities make in turn mobility lower, as those families with low beliefs in effort have higher income inertia. We model agents as trying to learn the relative importance of effort and predetermined factors in the generation of income. They learn from two sources, by socialization in neighbourhoods and from their dynastic income mobility experience. In a dynamic model, we characterize conditions on initial beliefs under which the society exhibits in the long run income segregation with low rates of social mobility, or income integration with high social mobility rates. We provide evidence for U.S. that support our theoretical results. Using survey-data with beliefs in a just world we show that more segregated communities are correlated with more polarized and pessimistic views about the value for effort.