Marriage, Quarrels, and Lovemaking

The frequency of lovemaking minus the frequency of quarrels is claimed to predict marital stability. Here, we set up a family economics model using insights from evolutionary psychology to ground this ad hoc formula. JEL Classifications: D10, D91, J12

Influencing the Preferences of Children through Legal Impacts on Parenting Style

The overriding theme of the conference honoring Bob Cooter and his work is the question whether law and policy can change people’s preferences. The conventional “law and economics” answer is “no.” People have preferences that are fixed. What changes in law and policy do is to change how people behave by altering the costs and benefits people face in pursuit of their preferences. Put simply, the assumption of the “law and economics” model is that people respond to financial incentives by changing how they act, not what they want. So, to take a simple example, imagine two people at the same starting point, both wanting to drive separately to visit a mutual friend. Their preference to get there promptly and safely is common to both of them, but how they act in pursuit of that goal may well differ. Moreover, government can alter how they drive to their friend’s by making changes such as putting in a freeway, or adding a new lane to the road, or installing lots of new traffic signals or stop signs along one route. The two people may have driven different routes previously, and they may alter their driving strategy in response to the policy changes government has adopted and may still decide that different routes are better for them. But they do not change their desire to see their friend in a prompt and safe manner. In this Article I offer a counterexample — an instance in which changes in law and policy can not only alter the behavior of some with fixed preferences, but also can impact the preferences of others. My example is about changes in society that can alter parenting style (of those parents with a fixed preference to have their children succeed) and can also change the underlying preferences that those children have as to how their lives should play out.

Do Monetary Incentives Undermine Performance on Intrinsically Enjoyable Tasks? A Field Test

Economists have long been intrigued by an influential literature in psychology positing that monetary pay lowers performance on enjoyable tasks by crowding out agents' intrinsic interest in them. But typical experiments in this literature do not report a full set of performance metrics, which might reveal conflicting evidence on crowding out. Further, they may suffer from confounds. To evaluate these issues, we review over 100 prior tests and run a field experiment building on the canonical two-session test for crowding out wherein agents receive pay for an interesting activity in session one that is withdrawn unexpectedly in session two. We test whether pay harms performance using a comprehensive set of performance measures, and if so, whether unmet pay expectations might also contribute to this decline. Our results on output, productivity and quits are most consistent with a standard economics model than with a crowding out one. Additional, though more speculative, evidence suggests that unmet pay expectations may harm output quality.

Social Structures and Reputation in Expert Review Systems

We model an expert review system where two producers competing for market share each are evaluated by two raters. Employing economics experiments, the paper examines how the rater’s incentive to provide objective feedback can be distorted in the presence of social ties and different penalty structures for assigning unobjective ratings. The results reject the self-interested model. We find that raters assign more biased ratings to help the producer they know compete, and this distortion is exacerbated when the reputation cost for rating unobjectively is lowered. Counterintuitively, when both of the raters know the same producer, the likelihood of biased ratings drops significantly. To explain the empirical regularities, we develop a behavioral economics model and show that the rater’s utility function should account not only for social preferences toward the producer, but also the rater’s psychological aversion toward favoring a producer more than the other rater. Our findings demonstrate that it is critical for policymakers to be cognizant of the nonpecuniary factors that can influence behavior in expert review systems. This paper was accepted by John List, behavioral economics.

Dreams Collide

Chapter 7 describes Headen’s difficulties expanding his coalition strategy as he moved from auto manufacturing to auto racing in the mid-1920s. Documented are his reconfiguration of the Afro-American Automobile Association to focus on dirt-track racing; his career as an auto racer and race promoter; and internal rifts within his coalition based on gender, professional competition, and religious and political differences. The chapter explores defections from the coalition by women and religious figures, upset over the switch from a business model dedicated to racial advancement to a track culture steeped in profanity, alcohol, and danger; departures by political conservatives upset over the selection of a prominent black nationalist as the Association’s publicist; and Headen’s rejection by fellow race organizers competing directly with him for audiences. These internal conflicts, which eventually splintered both the Association and Headen’s marriage, ultimately revealed the limits of the “coalition economics” model.