TOWARD AN ECONOMIC THEORY OF FASHION

Competition for rank within animal societies is an innate drive recognized in sociobiological and evolutionary theory. In human societies, fashion signals social rank or status. We extend standard economic theories of competitive and noncompetitive markets to analyze fashion by including the status-seeking incentive. In the competitive case, the conditions under which fashion cycles occur are examined. In the noncompetitive case, producers of fashion services discriminate between customers intertemporally to sustain the fashionability of their services. Unlike the standard models of fashion that populate marketing textbooks, our theory of fashion does not require that demand curves slope upward.     

AN ECONOMIC THEORY OF WORKAHOLICS AND ALCOHOLICS

This paper considers the role of alcohol in agency problems in order to provide an economic rationale for alcoholics and workaholics. In our model, alcohol reduces productivity, but also can make imbibers blurt private information. We show that in the optimal contract, low‐productivity workers are compelled to over‐indulge in alcohol, while high‐productivity workers overproduce output. Thus, workers are made into “alcoholics” and “workaholics” depending on their productivity. We conclude that excessive drinking (working) may be the result, not the cause, of low (high) productivity of workers. (JEL D82, VSOP)     

TOWARD A POSITIVE ECONOMIC THEORY OF ANTITRUST

Most economists associate antitrust policy with the Sherman and Clayton Acts. Nonetheless, there is in England and America a much older body of antitrust law, namely, the common law of restraint of trade. This regulation, like language and markets, evolved over a long period of time. This article examines whether the rules that the common law courts developed can be explained by a hypothetical wish to maximize social wealth and concludes that many of them can be. The last part of the article outlines a theory of legal evolution.     

AN ECONOMIC ANALYSIS OF RIOT PARTICIPATION

This paper examines the behavior of riot participants in the context of an expected utility maximization model. The basic hypothesis is that a riot presents the participants with a constantly changing set of opportunities, and that their behavior can only be understood in light of these changing returns and costs. The model is tested using data collected by the National Advisory Committee on Civil Disorders. The results are consistent with the hypothesis of maximizing behavior.     

AN ECONOMIC ANALYSIS OF BANKRUPTCY STATUTES

Personal bankruptcy statutes are analyzed as social insurance agreements. The risk-sharing and incentive effects resulting from changes in bankruptcy laws are studied. It is shown that increasing the leniency of bankruptcy statutes may have unambiguous short-term benefits to potential bankrupts, but may be detrimental in the long-run.     

AN EXPRESSIVE VOTING THEORY OF STRIKES

Union members may vote for a strike even if they do not expect to thereby increase their wages. For under majority voting any one member's vote for a strike is unlikely to be decisive. A union member who obtains a non-infinitesimal emotional benefit from the act of voting for a strike may therefore vote in its favor. This hypothesis can explain the existence of strikes and the conditions which make strikes especially likely.     

AN ECONOMIC ANALYSIS OF THE DEMAND FOR ABORTIONS

This study uses an economic model of fertility control to estimate the demand for abortions. The results show that the fundamental law of demand holds for abortions, with the price elasticity of demand equal to –.81. Abortions are a normal good with an income elasticity of demand equal to .79. The demand for abortions is also positively related to the labor force participation of women and to being unmarried. Catholic religion, education and the poverty status of women were found to have no statistically significant impact on the demand for abortions.     

AN ECONOMIC ANALYSIS OF A HYBRID LIABILITY RULE

This article considers a legal setting with a tort liability rule that includes both a care-based component (such as negligence) and a non–care-based component (such as no liability). Children trespassers are sometimes protected by a doctrine known as attractive nuisance. Attractive nuisance acts as a hybrid liability rule in its application—it applies the negligence rule to accidents involving some types of children, and the no-liability rule to accidents involving other types of children. A standard economic model of torts is applied to a trespass setting, and the potential efficiency of a hybrid liability rule is examined.     

INTEGRATING MARKET ALTERNATIVES INTO THE ECONOMIC THEORY OF OPTIMAL DETERRENCE

Leading economic models of crime assume that potential criminals achieve their ends by criminal means or not at all. We develop a framework in which potential criminals can also attain their objectives through voluntary trade. Our framework helps explain several features of the legal system that have proven to be problematic for the canonical approach: why optimal sanctions should be increasing in an individual's criminal history, and why necessity may be a partial defense in some situations. Finally, the inclusion of a voluntary trade option makes the maximization of a utilitarian welfare function identical to minimizing the costs of crime, implying that a long‐standing controversy in the literature is, in part, an artifact of the assumption that criminals face a binary choice set. (JEL K42, D60, H00)     

EQUILIBRIUM STRUCTURE IN AN ECONOMIC MODEL OF CONFLICT

Four different types of equilibrium are possible within a two-player model of society where only armed self-enforcement of property rights is possible. The main underlying parameters are the total resource endowment and the initial distribution of this endowment between the players. The parameter space is partitioned into regions in which the respective types of equilibrium occur The equilibrium types involve positive arms expenditure by, respectively, neither player the richer player, and both players; the latter case involves a sub-type in which the poorer player's entire endowment is expended on arms. (JEL D30, D72, D74)     

AN ECONOMIC ANALYSIS OF IDENTITY AND CAREER CHOICE*

Standard economic models tend to be more specific about pecuniary payoffs than nonpecuniary payoffs to education. Based on the ideas of Akerlof and Kranton, we consider a model of career choice and identity where individuals derive nonpecuniary identity payoffs. Using factor analysis on a range of attitude questions, we find two factors related to identity (career orientation and social orientation), which are important for planned educational choices and for observed gender differences. The implication is that policy makers and institutions of higher education need to focus on identity‐related issues rather than just improved financial incentives if they aim at attracting high‐ability youths to certain careers. (JEL I21, J24)     

AN ECONOMIC ANALYSIS OF STATE SUPPORT FOR HIGHER EDUCATION

There are few practical problems in which the economist has a more direct interest than those relating to the principles on which the expense of the education of children should be divided between the state and the parents.–A lfred M arshall , Principles of Economics     

AIDS TESTING: AN ECONOMIC ASSESSMENT OF EVOLVING PUBLIC POLICY

Should laissez faire prevail as to the private-market supply of the AIDS antibody test? Applying a recent theorem from the economics of property rights, this paper determines that the answer is negative, and shows that the optimal policy regarding the AIDS antibody test differs according to whether individuals are at low risk or high risk. Next, using the same economic theory, this paper finds that rules guaranteeing strict confidentiality of the AIDS test result are unjustified. They also are unjustified on traditional legal grounds.     

DOMESTIC CONTENT LEGISLATION: HOUSE VOTING AND THE ECONOMIC THEORY OF REGULATION

House voting on domestic content legislation provides a rare opportunity to examine the political economy of protectionism with respect to a particular issue rather than by using the traditional interindustry approach. The results indicate that a representative's vote in favor of the content legislation and the intensity of the legislator's preferences are positively related to the importance of the auto and steel industries in the representative's district, an increasing unemployment rate, campaign contributions from labor groups, affiliation with Democratic Party, and a liberal ideology. Despite ideology's statistical significance, the results suggest this variable can be disregarded because neither the predictive accuracy nor the explanatory power of the model is improved by its inclusion. The estimates also provide insights concerning the impact of changes in the independent variables upon voting patterns.