The willingness of individuals to engage in a harmful act may be influenced by direct personal experiences and the experiences of others, which can inform individuals about the likely consequences of their actions. In this paper, we examine how obstetricians respond to litigation. It is contended that obstetricians respond to increases in litigiousness by performing more caesarian sections. Using micro data, we examine whether physicians perform more caesarians after they or their colleagues have been contacted about a lawsuit. We observe very small, short-lived increases in caesarian section rates. It does not appear that the recent sharp rise in caesarian section rates is in direct response to litigation. We present indirect evidence that the increase may instead represent a change in consumer tastes.

This paper proposes a method to estimate relative ministerial weights in parliamentary democracies. Specifically, we combine a bargaining model of government formation with maximum likelihood estimation. The data required for estimation are (i) who the formateurs are, (ii) what each party's voting weight is, and (iii) what ministerial seats each party obtains. We use the variation of the data and the structure of the bargaining model to recover ministerial weights and other parameters. Additionally, the method can measure the effects of voting weights and formateur advantage. We apply our proposed method to the case of Japan. Our results show that political players value pork-related posts (such as the Minister of Construction) more than prestigious ones (such as the Minister of Foreign Affairs). We also find that there is a significant formateur advantage, while voting weights do not have a significant scale effect.

We estimate a model of strategic voting by adopting a recently developed inequality-based estimator and quantify the impact of strategic voting on election outcomes. The difficulty of identification comes from the fact that preference and voting behavior do not necessarily have a one-to-one correspondence for strategic voters. We obtain partial identification of preference parameters from the restriction that voting for the least-preferred candidate is a weakly dominated strategy. The extent of strategic voting is identified using variation generated by multiple equilibria. Using Japanese general-election data, we find a large fraction (68.2%, 82.7%) of strategic voters, only a small fraction (2.2%, 7.4%) of whom voted for a candidate other than the one they most preferred (misaligned voting). Existing empirical literature has not distinguished between the two, estimating misaligned voting instead of strategic voting. Accordingly, while our estimate of strategic voting is high, our estimate of misaligned voting is comparable to previous studies.

I empirically study the expert's agency problem in the context of lawyers and their clients. Incentives of lawyers and clients are misaligned in dispute resolution under contingency fee arrangement with which lawyers receive a fraction of recovered payment as compensation while bearing the legal cost. Lawyers prefer to pursue a case less than their clients prefer as they incur all the legal costs and receive smaller fraction of payment. In this paper, I measure the degree to which lawyers work in the interest of their clients. To do so, I construct a bargaining model of dispute resolution that nests two special cases as well as their convex combinations in which lawyers work in their clients' best interests and in which they work in their own interests, and estimate the model using data of medical malpractice disputes. The timing of dropped cases identifies the nesting parameter because cases are dropped more frequently and at earlier timings if lawyers work in their own interests. I find that lawyers work almost perfectly in their own interest. Then, I compute the cost of agency problem resulting from misaligned incentives by simulating the first-best outcome using the estimated model. Finally, I evaluate the impact of tort reform on contingency fee, and show that limitation of contingency fee increases the agency problem further.

Lengthy legal procedures and high legal costs are among the main drawbacks of the current litigation system in the United States. This paper studies the dispute resolution process with special emphasis on the dynamic patterns of litigation and settlement as well as the legal costs incurred and associated payments. I propose a dynamic bargaining model of dispute resolution with learning, estimate the model using micro data on medical malpractice disputes, and use the estimated model to assess the impact of proposed tort reforms. In my model the plaintiff and the defendant do not have a common prior on the probability of winning court judgment and learning takes place as they bargain. In the equilibrium, a trade-off between the legal costs of delaying agreement and the possibility of learning new information determines the dynamic patterns of litigation and settlement. Estimation results show that the model fits all aspects of the data well and learning plays a quantitatively important role in explaining the dynamic patterns of litigation and settlement. Using the estimated model, I conduct policy experiments to assess some of the proposed tort reforms. I find that capping jury awards or eliminating the contingency fee rule significantly shortens the expected time to resolution and lowers the expected total legal costs. Since shorter legal procedures would reduce congestion in the legal system and savings of legal costs would lower the deadweight loss of litigation, I conclude that these reforms could have important welfare implications. On the other hand, "loser-pay-all" allocation of legal fees delay resolution and increase costs.