• Testing a Fine is a Price in the Lab

63 International Review of Law and Economics
(with Lewis Kornhauser and Stephan Tontrup)

This paper reexamines the widely cited Israeli kindergarten field experiment by Gneezy and Rustichini (2001). They showed that the introduction of a late penalty induced even more parents to arrive late to pick up their children. The authors suggested that subjects may have perceived monetary fines that prohibit late arrival as prices that permit it. However, they did not provide any causal justification – in fact, the authors provided four additional explanations for their observation. We replicate their studies in the laboratory setting, providing causal support for the fine-as-price hypothesis. In addition, we demonstrate that the more socially-oriented a person is, the more intense this effect will be. Therefore, the magnitude of the fine-as-price effect varies in accordance with the population composition.

• Why is free education so popular? A political economy explanation

22 Journal of Public Economic Theory 973-991

(with Juan Correa, Francisco Parro and Mauricio VIllena; I contributed to this project during my second-year summer internship under the Prácticas Para Chile program at the Ministry of Finance, Republic of Chile.)

This paper analyzes the political support for different funding regimes of education in a one‐person, one‐vote democracy. We focus the analysis on four systems that have had a preponderant presence in the political debate on education: a private system, a public system that delivers the same resources to each student (universal‐free education), a public system that intends to equalize results, and a public system that aims to maximize the output of the economy. We show that a system of universal free education is the Condorcet winner. The level of income inequality and the degree to which income distribution is skewed to the right are key factors behind this conclusion. We also show that the voting outcome of public versus private funding for education depends crucially on the type of public funding under consideration.

• Hybrid Mechanisms: New Trends in Dispute Resolution

28 Harvard Negotiation Law Review (forthcoming 2022)

Hybrid mechanisms combining arbitration and mediation emerged as popular forms of dispute resolution in the last three decades. While contractual parties today often stipulate mediation before arbitration (Med-Arb), a new trend reverses that order, putting arbitration before mediation. Arb-Med, in which arbitration occurs first but parties then attempt mediation with the arbitral award sealed in an envelope, seems profoundly counterintuitive. This paper demonstrates that the incentive structures and legal environments of the two mechanisms are very different, even though Arb-Med merely flips the order of Med-Arb. I explain why parties pursue different dispute-resolution mechanisms by showing that each of Med-Arb, Arb-Med and standalone arbitration can be desirable in terms of helping parties achieve efficient economic outcomes. Since each of these mechanisms is desirable under different circumstances, the law should facilitate them and treat them equally. I show this is not the case under current U.S. federal law. I make two recommendations that will facilitate these desirable hybrid mechanisms: (1) courts should view hybrid mechanisms as sui generis processes, and (2) courts should adopt a broad interpretation of the scope of FAA arbitration.