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The Market for Federal Judicial Law Clerks
Abstract
In September 1998, the Judicial Conference of the United States abandoned its latest attempt to regulate the timing of interviews and offers in the law clerk selection process. This paper surveys the further unraveling of the market since then, makes comparisons with other entry level professional labor markets, and evaluates some possibilities for reform.
... An important example is the market for federal judicial law clerks, our main application in this paper. 1 Judges depend heavily on their law clerks ( Avery et al., 2001); their role includes everything from the management of disputes in district courts to the drafting of opinions at the U.S. Supreme Court ( Bonica et al., 2017). 2 Hence, an efficient selection and matching of clerks to judges is a significant input into the efficiency of the federal justice system. ...
... But the cost of delay may be the loss of opportunity, as some candidates receive offers from judges who believe they can make reasoned judgments on the basis of less information". 10 Third, students feel pressured to accept any offer they might receive ( Haruvy et al., 2006;Avery et al., 2001). Law career counselors reason that "one can never tell how far the wrath of a judge scorned will extend and exactly what the consequences will be, for you or for others" (Strauss, 2015). ...
... 11 Systematic survey evidence confirms the prevalence of this norm. In the year 2000, the most recent year for which such data are available, 73% of the students accepted the first offer they received (Avery et al., 2001). 12 ...
Unraveling, the excessively early matching of future workers to employers, is a pervasive phenomenon in entry-level labor markets that leads to hiring decisions based on severely incomplete information. We provide a model of unraveling in one-to-one matching markets for prestigious positions. Its distinguishing feature is that the market operates over an extended time period during which information about potential matches arrives gradually. We find that unraveling causes potentially thick markets to spread thinly over a long time period. In equilibrium, an employers desirability is correlated neither with the time at which they hire, nor with the expected productivity of their matched worker. Unraveling thus significantly redistributes welfare among employers compared to a pairwise stable match. We study policies that manipulate the availability of information about students and show that they are effective only if they provide a sudden surge in information. Our main application is the market for U.S. federal appellate court clerks, a significant input into the efficiency of the justice system. Consistent with the model, hiring times in our dataset are spread over a period of six months and are uncorrelated with the desirability of a judge as an employer.
... From beginning to end, Stage 1 may have covered a period of more than 50 years, or fewer than 1." 36 The inefficiency of early matching was particularly clear when college football teams used to be matched with bowls before they had finished playing all their regular season games: this meant that some matches were made before the match quality could be determined, which had a negative effect on television viewership (Fréchette, Roth, and Ünver 2007). 37 For a variety of approaches to understand particular aspects of early contracting and/or unraveling, such as its effect on thickness, on information, etc., and/or on market conditions that might promote or deter unraveling, see Roth and Xing (1994), Li and Rosen (1998), Li andSuen (2000, 2004), Kagel and Roth (2000), Suen (2000), Damiano, Li, and Suen (2005) Consider, for example, the markets for two of the most competitive kinds of positions for new lawyers: clerkships for appellate judges (Avery et al. 2001(Avery et al. , 2007, 38 and associate positions in the largest law partnerships Xing 1994 andRoth 2012). If someone graduating from law school this year moves into one of those positions, it is very likely that the job was arranged two years in advance (formally in the case of a clerkship, somewhat informally in case of an associate position, with the formal contract being made only one year in advance). ...
... In each case, the proposal was abandoned due to lack of compliance, and a period of unregulated unraveling followed. Avery et al. (2001) reported on the unraveled state of the market following the formal abandonment of the 1993 plan in 1998. 40 Information available by the beginning of the third year but not by the beginning of the second includes transcripts from four semesters, information on law journal selection and election to law review editorial boards, information on moot court competitions, etc. this abundant information and to choose whom to interview from the large pool of candidates, while avoiding competition from other judges. ...
... Markets that have long operated at 43 See also Federal Law Clerk Hiring Pilot, https://oscar.uscourts.gov/federal_law_clerk_hiring_pilot. Note that one problem documented in Avery et al. (2001Avery et al. ( , 2007 and elsewhere is that an interview with a judge is scheduled based, either implicitly or sometimes explicitly, on an understanding that the student being interviewed will accept an offer if one is made. If this feature of the market is not altered, requiring that offers remain formally open for 48 hours will not have the desired effect of allowing candidates to consider multiple offers. ...
Marketplaces are often small parts of large markets, and both markets and marketplaces come in many varieties. Market design seeks to understand what marketplaces must accomplish to enable different kinds of markets. Marketplaces can have varying degrees of success, and there can be marketplace failures. I'll discuss labor markets like the market for new economists, and also markets for new lawyers and doctors that have suffered from the unraveling of appointment dates to well before employment begins. Markets work best if they enjoy social support, but some markets are repugnant in the sense that some people think they should be banned, even though others want to participate in them. Laws banning such markets often contribute to the design of illegal black markets, and this raises new issues for market designers. I'll briefly discuss markets and black markets for narcotics, marijuana, sex, and surrogacy, and the design of markets for kidney transplants, in the face of widespread laws against (and broader repugnance for) compensating organ donors. I conclude with open questions and engineering challenges.
... unraveling, with positions for new graduates in some recent periods being filled two years before graduation (see [19][20][21]). [22] writes of the judges' perception of that market as follows: ...
... Low quality firms almost never make early offers. However, when they make mistakes and make early offers (which is a more frequent mistake in markets 1-10, never happens in market 11-15, and only rarely in markets [16][17][18][19][20], applicants tend to accept those offers (as seen in the bottom right graph of Figure 2). Only in the final markets, markets 16-20, when early offers are very rare, are they accepted only 50% of the time (though this is a very small number phenomenon). ...
... Since for both firms and workers, matching to a high quality partner is worth more than to a low quality partner, we use the welfare of firms to provide a measure of total welfare. 19 We aim to measure the proportion of gains achieved compared to the payoffs achieved by a random match that matches as many agents as possible, that is the payoffs achieved by a randomly generated full matching, where each possible full matching is equally likely. We call the sum of these expected firm payoffs the random match payoffs. ...
Markets sometimes unravel, with offers becoming inefficiently early. Often this is attributed to competition arising from an imbalance of demand and supply, typically excess demand for workers. However this presents a puzzle, since unraveling can only occur when firms are willing to make early offers and workers are willing to accept them. We present a model and experiment in which workers’ quality becomes known only in the late part of the market. However, in equilibrium, matching can occur (inefficiently) early only when there is comparable demand and supply: a surplus of applicants, but a shortage of high quality applicants.
... More generally in the context of two-sided matching markets in which information about the quality of a match arrives slowly, the inefficient unravelling caused by the incentive to anticipate the decision of opponents is well documented, for instance in markets for lawyers (Posner et al. (2001)) or gastroenterologists (Niederle and Roth (2009) (Roth (1984)). In the early 1940's hospitals would hire medical students as future interns or residents two years in advance of their graduation, so that the matching was done before crucial information about students (such as skills or preferences for a particular medical specialisation) became available. ...
... www.fec.gov) State 1981-19901991-20002001-2010State 1981-19901991-20002001-2010 Alabama 9 ...
... www.fec.gov) State 1981-19901991-20002001-2010State 1981-19901991-20002001-2010 Alabama 9 ...
In this thesis we present a new take on two classic problems of game theory: the "multiarmed bandit" problem of dynamic learning, and the "Colonel Blotto" game, a multidi- mensional contest. In Chapters 2-4 we treat the questions of experimentation with congestion: how do players search and learn about options when they are competing for access with other players? We consider a bandit model in which two players choose between learning about the quality of a risky option (modelled as a Poisson process with unknown arrival rate), and competing for the use of a single shared safe option that can only be used by one agent at the time. We present the equilibria of the game when switching to the safe option is irrevocable, and when it is not. We show that the equilibrium is always inefficient: it involves too little experimentation when compared to the planner solution. The striking equilibrium dynamics of the game with revocable exit are driven by a strategic option-value arising purely from competition between the players. This constitutes a new result in the bandit literature. Finally we present extensions to the model. In particular we assume that players do not observe the result of their opponent's experimentation. In Chapter 5 we turn to the n-dimensional Blotto game and allow battlefields to have different values. We describe a geometrical method for constructing equilibrium distribution in the Colonel Blotto game with asymmetric battlfield values. It generalises the 3-dimensional construction method first described by Gross and Wagner (1950). The proposed method does particularly well in instances of the Colonel Blotto game in which the battlefield weights satisfy some clearly defined regularity conditions. The chapter also explores the parallel between these conditions and the integer partitioning problem in combinatorial optimisation.
... The literature has documented many episodes of unraveling: the market for medical interns is a famous example in which labor contracts for interns were signed two years before the future interns would graduate (see Roth 1984 or Roth andOliveira Sotomayor 1990). Other examples of unraveling include the market for federal court clerks (Avery et al. 2001, Roth 2013, for gastroenterology fellows Roth 2003, 2004), for college football games (Fréchette et al. 2007, Roth 2012, and for placement in sororities (Mongell and Roth 1991). ...
... The market may become divided in equilibrium, with one segment hiring early and the other waiting to match in the final period with full information about agents' qualities. We demonstrate that a mixed level of adherence can be sustainable in an equilibrium, which is consistent with the empirical evidence (Avery et al. 2001). 1 As anyone who has gone through the job market in economics know, there is a value to early resolution of uncertainty, even if all jobs start in the Fall of the next academic year. The same is true of academic departments as well, not only of job candidates: If we know early on that we have hired in one field, we can use our slots to hire in other fields. ...
We present a theoretical explanation of inefficient early matching in matching markets. Our explanation is based on strategic complementarities and strategic unraveling. We identify a negative externality imposed on the rest of the market by agents who make early offers. As a consequence, an agent may make an early offer because she is concerned that others are making early offers. Yet other agents make early offers because they are concerned that others worry about early offers, and so on and so forth. The end result is that any given agent is more likely to make an early offer than a late offer.
... Law clerk hiring is a decentralized process (Avery et al. 2001). Applicants apply directly to individual judges and must tailor their application materials to indicate both why they want to clerk for each judge and why they have the skills to be a successful clerk. ...
Federal law clerks play a vital role in the development and implementation of the law. Yet, women remain underrepresented in these positions. We suggest that one reason for this underrepresentation may be differences in hiring practices among judges in the federal judiciary. Specifically, we hypothesize that male judges and conservative judges may be less likely to hire female law clerks than female judges and liberal judges for two reasons. First, gendered attitudes held by judges may make some judges prone to hire women and/or others more resistant to these hires. Second, due to ideological asymmetries between the law clerk pool and judges in the federal judiciary, conservative judges and male judges may be less likely to hire women law clerks. Using data on clerks hired in the federal judiciary between 1995 and 2005, we find support for both mechanisms.
... 41. See, for example, Avery et al. (2001). ...
In many matching markets, bargaining determines who matches with whom and on what terms. We experimentally investigate allocative efficiency and how subjects’ payoffs depend on their matching opportunities in such markets. We consider three simple markets. There are no information asymmetries, subjects are patient, and a perfectly equitable outcome is both feasible and efficient. Efficient perfect equilibria of the corresponding bargaining game exist, but are increasingly complicated to sustain across the three markets. Consistent with the predictions of simple (Markov perfect) equilibria, we find considerable mismatch in two of the markets. Mismatch is reduced but remains substantial when we change the nature of bargaining by moving from a structured experimental protocol to permitting free-form negotiations, and when we allow players to renege on their agreements. Our results suggest that mismatch is driven by players correctly anticipating that they might lose their strong bargaining positions, and by players in weak bargaining positions demanding equitable payoffs.
... This paper is also related to some papers within the theory of matching which analyze different legal entry-level labor markets. Avery et al. (2001) provide empirical data and discuss possible reconstructions of the market for legal clerkships at US federal courts for graduating law students, primarily addressing the unraveling problem. In Avery et al. (2007), the authors describe the unraveling in this market and relate to the problem of exploding offers. ...
Diese Dissertation besteht aus drei unabhängigen Kapiteln in den Bereichen Matching Market Design, Industrieökonomie und Wettbewerbspolitik. Kapitel 1 behandelt den Matching-Markt für juristische Referendariatsstellen in Deutschland. Wegen übermäßiger Nachfrage müssen Anwälte oft warten, bevor sie zugewiesen werden. Der aktuell verwendete Algorithmus berücksichtigt nicht die Zeitpräferenzen der Anwälte. Daher werden viele wünschenswerte Eigenschaften nicht erfüllt. Basierend auf dem matching with contracts Modell schlage ich dann einen neuen Mechanismus vor, der die Wartezeit als Vertragsterm verwendet, so dass die Mängel des gegenwärtigen Mechanismus überwunden werden können. In Kapitel 2 analysiere ich den Wettbewerb von zweiseitigen Online-Plattformen, wie sozialen Netzwerken oder Suchmaschinen. Werbetreibende zahlen Geld, um ihre Anzeigen zu platzieren, während Nutzer mit ihren privaten Daten "bezahlen", um Zugang zu der Plattform zu erhalten. Ich zeige, dass das Gleichgewichtsniveau der Datenerhebung verzerrt ist, abhängig von der Intensität des Wettbewerbs und den Targeting-Vorteilen. Weniger Wettbewerb auf jeder Marktseite führt zu mehr Datensammeln. Wenn jedoch Plattformen Geldzahlungen auf beiden Marktseiten verwenden, wird die effiziente Menge an Daten gesammelt. Kapitel 3 untersucht die dynamische Preissetzung auf Märkten für Flug- oder Reisebuchungen, auf denen Wettbewerb während einer endlichen Verkaufszeit mit einer Frist stattfindet. Unter Berücksichtigung der intertemporalen Probleme von Firmen und vorausschauenden Konsumenten hängen die Gleichgewichtspreispfade von der Anzahl der nicht verkauften Kapazitäten und der verbleibenden Verkaufszeit ab. Ich ermittle, dass mehr Voraussicht der Konsumenten die Konsumentenrente erhöht, aber die Effizienz reduziert. Ferner ist Wettbewerbspolitik besonders wertvoll, wenn die Marktkapazitäten zu hoch sind. Des Weiteren kann die ex-ante Produktion von Kapazitäten ineffizient niedrig sein.
... The unravelling of the market has been particularly acute in the process by which US federal court judges hire federal judicial law clerks. Avery et al. (2001) note that, at the time when many prominent law schools in 1999 abandoned their attempts to regulate the time at which letters of recommendation could be sent, the clerk-hiring process got under way two years before the clerkship positions themselves were due to begin. The behaviour of judges in their attempts to jump the gun on their rivals in making early offers and seeking binding acceptances in order to attract the best candidates, led the New York Times to refer to the process as a judicial 'free-for-all' in which judges 'behave[ed] like 6-year-olds'. ...
... As in the entry-level gastroenterology labor market in Niederle and Roth (2004) [NR2004], early matching costs include "loss of planning flexibility", whereas the penalty for late matching owes to market thinness. For a cost of early matching, we simply follow Avery, et al. (2001) who allude to the condemnation of early match agreements. So we posit a negative stigma to early matching relative to peers. ...
We develop a continuum player timing game that subsumes standard wars of attrition and pre-emption games, and introduces a new rushes phenomenon. Payoffs are continuous and single-peaked functions of the stopping time and stopping quantile. We show that if payoffs are hump-shaped in the quantile, then a sudden “rush” of players stops in any Nash or subgame perfect equilibrium. Fear relaxes the first mover advantage in pre-emption games, asking that the least quantile beat the average; greed relaxes the last mover advantage in wars of attrition, asking just that the last quantile payoff exceed the average. With greed, play is inefficiently late: an accelerating war of attrition starting at optimal time, followed by a rush. With fear, play is inefficiently early: a slowing pre-emption game, ending at the optimal time, preceded by a rush. The theory predicts the length, duration, and intensity of stopping, and the size and timing of rushes, and offers insights for many common timing games.
... Roth and Xing (1994) provide a detailed overview of various evidence for market unraveling. See alsoMongell and Roth (1991),Haruvy et al. (2006),Avery et al. (2009), Avery et al. (2001, andFréchette et al. (2007). ...
Many two-sided matching markets tend to unravel in time with transactions becoming inefficiently early. In a two-period decentralized model, this paper shows that when a market culture allows firms to make exploding offers, unraveling is more likely to occur and lead to a less socially desirable matching outcome. However, the use of exploding offers is only a necessary but not a sufficient condition for unraveling to occur. A market with an excess supply of labor is less vulnerable to the presence of exploding offers; yet the conclusion is ambiguous for a market with a larger uncertainty in early stages, which depends on the specific information structure. While a banning policy on exploding offers tends to be supported by high quality firms and workers, it can be opposed by those of low qualities. This explains the prevalence of exploding offers in practice.
... In particular, the introduction of the stable matching mechanism, which reversed the unraveling, did so not by making firms unwilling to make early offers, but by making it safe for workers to decline them. This experimental observation informed and was confirmed in subsequent field and experimental studies of the market for lawyers (see Avery et al. 2001, and Haruvy et al 2006, and played a role in the subsequent design of the Gastroenterology labor market described below. ...
... ses contributions théoriques, et à Alvin Roth, pour ses travaux empiriques. (1962) consacré aux processus d'appariement sur de tels marchés. Le marché du travail est un cadre naturel d'étude pour les marchés d'appariement (Shapley et Shubik, 1971, Kelso et Crawford, 1982), en particulier pour l'affectation des médecins en fin d'études aux hôpitaux.Avery et al., 2001) ou des gastroentérologues aux Etats-Unis (Niederle et al., 2006). Cette situation dite de « détricotage » (unraveling) est susceptible d'engendrer de nombreux coûts : perte de flexibilité de planification du fait du productivités. La structure des incitations permet ainsi de contrôler les classements de partenaires dans l'expérience : ...
Experimental Economics and the Evaluation of Labor Market Programs
Over the past few decades behavioral economics and experimental economics have received increasing attention among economists. In this paper, we show how laboratory experiments provide useful tools for the evaluation of labor market programs. We present a general framework and two examples to show how experiments and existing methods act as complementary inputs of an evaluation process. We also discuss what experimental evidence adds to standard theoretical representations of the labor market.
... As with the entry-level gastroenterology labor market in McKinney, Niederle, and Roth (2005), we assume that early matching costs include "loss of planning flexibility", whereas the penalty for late matching owes to market thinness. Also, we follow Avery, et al. (2001) who allude to the condemnation of early match agreements. So we posit a negative stigma to early matching relative to peers. ...
We develop a simple new timing game that offers a unified theory of sudden mass movements in economics, such as arise in matching, asset bubbles, and bank runs. We distinguish between rushes precipitated by greed and fear --- i.e., the hunger for greater rewards from outlasting others, and the fear of missing out on early rewards.In our continuum player game, a payoff-relevant fundamental first "ripens", peaks at a "harvest time", and then "rots". Payoffs are also scaled by a single-peaked quantile rank reward. Three local timing games arise in equilibrium: a war of attrition, a slow pre-emption game, and a pre-emptive rush. Our theory explains why matching rushes and bank runs happen inefficiently early, and asset sales rushes occur late. For with greed, the harvest time precedes an accelerating war of attrition ending in a rush, whereas with fear, an inefficiently early rush precedes a slowing pre-emption game ending at the harvest time. The theory yields consistent predictions for rush size, timing, gradual play timing, duration, and stopping rates.By our theory:(a) asset sales rushes reflect liquidity and relative compensation; (b) unraveling in matching markets depends on early matching stigma and market thinness;(c) illiquid bank loans yields complete bank runs before incomplete ones.
... This suggests some degree of "unraveling" in the MBA market, but not the chronic levels seen in other markets such as certain medical specialties(Niederle and Roth (2003)) and law clerkships(Avery, Jolls, Posner and Roth (2001)).Li and Rosen (1998) develop a model of unraveling in a labor market with one key feature of our model (uncertainty about applicant ability) and without another (probationary hiring, though firms can buy their way out of contracts). They show that unraveling is more dramatic when the applicant pool is smaller, more applicants are relatively talented, and talent is more heterogeneous among applicants.13 ...
Drawing on insights from corporate finance and personnel economics, we show that firms consider potential employees using a real options approach, much as they do when making other types of capital investment decisions. Theoretically we find that firms’ hiring decisions are influenced by the uncertainty in workers’ productivity, competition in the labor market, adjustment costs, and redeployability concerns. Firms value probationary employment arrangements that provide the option to learn about the productivity of potential hires before permanent investment occurs. Higher uncertainty and adjustment costs hinder permanent investment and increase the value of the option to learn. Greater competition for workers speeds up firm investment and increases the value of probationary employment. Higher worker redeployability leads to more investment, if firms face sufficiently low competition. We test and confirm these predictions empirically using a novel dataset with detailed recruiting information from the labor market for MBA graduates.
... We focus mainly on the well-studied markets for judicial clerkships and for gastroenterology fellowships (see Avery et. al. 2001, and Niederle and Roth 2003). ...
In a model of local unraveling (early hiring), information about workers'productiv- ity is revealed over time and transmitted via a network of connections between …rms and workers. Although employment begins after workers …nish their training, em- ployment contracts can be signed earlier. Surprisingly, unraveling increases and then decreases with network density, but monotonically increases with the network's span, as well as with an increase information asymmetries between …rms. Unraveling de- creases as the e¢ ciency of the post-graduation marketplace increases, and is aected non-monotonically by changes in the accuracy of early information.(JEL: A14, D85, C78, L14)
... This paper is also related to the literature on networks in economics. Calvo-Armengol and Jackson (2004), and Calvo-Armengol and Zenou (2005) Avery et. al. (2001) and (2007). ...
This paper studies the phenomenon of early hiring in entry-level labor markets (e.g. the market for gastroenterology fellowships and the market for judicial clerks) in the presence of social networks. We offer a two-stage model in which workers in training institutions reveal information on their own ability over time. In the early stage, workers receive a noisy signal about their own ability. The early information is 'soft' and non-verfiiable, and workers can convey the information credibly only to firms that are connected to them (potentially via their mentors). At the second stage, 'hard' verifiable (and accurate) information is revealed to the workers and can be credibly transmitted to all firms. We characterize the effects of changes to the network structure on the unraveling of the market towards early hiring. Moreover, we show that an efficient design of the matching procedure can prevent unraveling.
... Even in a market with more applicants than positions there may be a shortage of the most highly qualified applicants. For example, the market for law clerks has experienced serious unraveling, with positions for new graduates in some recent periods being filled two years before graduation (see Avery, Jolls, Posner, and Roth 2001, and Haruvy, Roth, and Ünver 2006). Wald (1990) writes of the judges' perception of that market as follows: " But why the fervent competition for a handful of young men and women when our law schools spawn hundreds of fine young lawyers every year? ...
Markets sometimes unravel, with offers becoming inefficiently early. Often this is attributed to competition arising from an imbalance of demand and supply, typically excess demand for workers. However this presents a puzzle, since unraveling can only occur when firms are willing to make early offers and workers are willing to accept them. We present a model and experiment in which workers' quality becomes known only in the late part of the market. However, in equilibrium, matching can occur (inefficiently) early only when there is comparable demand and supply: a surplus of applicants, but a shortage of high quality applicants.
... (For an account of unraveling in the non-clerk law market, see Roth and Xing (1994), which is brought up to date below. For an account of unraveling in the clerkship markets, see Roth and Xing (1994) and Avery, Jolls, Posner and Roth (2001, 2007)).) ...
This note describes the unraveling of transaction dates in several markets, including the labor markets for new lawyers hired by large law firms and for gastroenterology fellows, and the market for post-season college football bowls. Together these will illustrate that unraveling can occur in markets with competitive prices, that it can result in substantial inefficiencies, and that marketplace institutions play a role in restoring efficiency. I’ll conclude with open questions about the role of marketplace institutions and the timing of transactions.Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.
We interview each other about how game theory and mechanism design evolved into practical market design. When we learned game theory, games were modeled either in terms of the strategies available to the players (“noncooperative games”) or the outcomes attainable by coalitions (“cooperative games”), and these were viewed as models for different kinds of games. The model itself was viewed as a mathematical object that could be examined in its entirety. Market design, however, has come to view these models as complementary approaches for examining different ways marketplaces operate within their economic environment. Because that environment can be complex, there will be unobservable aspects of the game. Mathematical models themselves play a less heroic, stand-alone role in market design than in the theoretical mechanism design literature. Other kinds of investigation, communication, and persuasion are important in crafting a workable design and helping it to be adopted, implemented, maintained, and adapted.
We examine a dynamic, two‐sided, one‐to‐one matching market, where agents on both sides interact over a period of time. We define and identify sufficient conditions for the existence of a dynamically stable matching, which may require revisions to initial assignments. A generalization of the deferred acceptance algorithm can identify dynamically stable outcomes in a large class of economies, including cases with inter‐temporal preference complementarities. We relate our analysis to market unraveling and to common market design applications, including the medical residency match.
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The most famous case in administrative law, Chevron U.S.A. v. Natural Resources Defense Council, Inc., has come to be seen as a counter-Marbury, or even a McCulloch v. Maryland, for the administrative state. But in the last period, new debates have broken out over Chevron Step Zero - the initial inquiry into whether Chevron applies at all. These debates are the contemporary location of a longstanding dispute between Justice Scalia and Justice Breyer over whether Chevron is a revolutionary decision, establishing an across-the-board rule, or instead a mere synthesis of preexisting law, inviting a case-by-case inquiry into congressional instructions on the deference question. In the last decade, Justice Breyer's case-by-case view has enjoyed significant victories. Two trilogies of cases - one explicitly directed to the Step Zero question, another implicitly so directed - suggest that the Chevron framework may not apply (a) to agency decisions not preceded by formal procedures and (b) to agency decisions that involve large-scale questions about agency authority. Both of these trilogies threaten to unsettle the Chevron framework, and to do so in a way that produces unnecessary complexity for judicial review and damaging results for regulatory law. These problems can be reduced through two steps. First, courts should adopt a broader understanding of Chevron's scope. Second, courts should acknowledge that the argument for Chevron deference is strengthened, not weakened, when major questions of statutory structure are involved.
Explore cutting-edge statistical methodologies for collecting, analyzing, and modeling online auction data Online auctions are an increasingly important marketplace, as the new mechanisms and formats underlying these auctions have enabled the capturing and recording of large amounts of bidding data that are used to make important business decisions. As a result, new statistical ideas and innovation are needed to understand bidders, sellers, and prices. Combining methodologies from the fields of statistics, data mining, information systems, and economics, Modeling Online Auctions introduces a new approach to identifying obstacles and asking new questions using online auction data. The authors draw upon their extensive experience to introduce the latest methods for extracting new knowledge from online auction data. Rather than approach the topic from the traditional game-theoretic perspective, the book treats the online auction mechanism as a data generator, outlining methods to collect, explore, model, and forecast data. Topics covered include: • Data collection methods for online auctions and related issues that arise in drawing data samples from a Web site • Models for bidder and bid arrivals, treating the different approaches for exploring bidder-seller networks • Data exploration, such as integration of time series and cross-sectional information; curve clustering; semi-continuous data structures; and data hierarchies • The use of functional regression as well as functional differential equation models, spatial models, and stochastic models for capturing relationships in auction data • Specialized methods and models for forecasting auction prices and their applications in automated bidding decision rule systems Throughout the book, R and MATLAB software are used for illustrating the discussed techniques. In addition, a related Web site features many of the book's datasets and R and MATLAB code that allow readers to replicate the analyses and learn new methods to apply to their own research. Modeling Online Auctions is a valuable book for graduate-level courses on data mining and applied regression analysis. It is also a one-of-a-kind reference for researchers in the fields of statistics, information systems, business, and marketing who work with electronic data and are looking for new approaches for understanding online auctions and processes.
This critique of property examines its classical conception: addressing its ontology and history, as well as considering its symbolic aspects and connection to social relations of power. It is organized around three themes: • the ways in which concepts of property are symbolically and practically connected to relations of power • the 'objects' of property in changing contexts of materialism • challenges to the Western idea of property posed by colonial and post-colonial contexts, such as the disempowerment through property of whole cultures, the justifications for colonial expansion and bio piracy. Dealing with the symbolism of property, its history, traditional philosophical accounts and cultural difference, Margaret Davis has written an invaluable volume for all law students interested in property law.
Do animals have rights? Almost everyone believes in animal rights, at least in some minimal sense; the real question is what that phrase actually means. By exploring that question, it is possible to give a clear sense of the lay of the land - to show the range of possible positions, and to explore what issues, of theory or fact, separate reasonable people. On reflection, the spotlight should be placed squarely on the issue of suffering and well-being. This position requires rejection of some of the most radical claims by animal rights advocates, especially those that stress the "autonomy" of animals, or that object to any human control and use of animals. But this position has radical implications of its own. It strongly suggests, for example, that there should be extensive regulation of the use of animals in entertainment, in scientific experiments, and in agriculture. It also suggests that there is a strong argument, in principle, for bans on many current uses of animals.
Covenants not to compete (CNCs) are used in employment contracts to prevent employees from working for other employers. The legal enforcement of CNCs varies across jurisdictions in the U.S.: some states ban them (notably, California), while a majority of states enforce CNCs when they reasonably protect a legitimate interest of the employer. The discrepancy in the legal policy regarding CNCs is reflected in an academic debate over the economic efficiency of these covenants. One side argues that CNCs are bad because they restrict labor mobility; the other side argues that the restriction on the movement of workers is good because it prevents workers from appropriating their employers' human capital investments (and CNCs thereby encourage such investment). The paper addresses together the two objectives of ex post (labor mobility) and ex ante (human capital investment) efficiency. It compares CNCs with the the alternative contract breach remedies of specific performance and liquidated damages. A given CNC may be analyzed as a hybrid that adopts specific performance with respect to attempted movements to employers within its scope and liquidated damages equal to zero with respect to movements outside its scope. Among the results of the paper is the finding that, where a CNC can be renegotiated, first-best performance and first-best investment can be induced. The appropriate choice of the CNC scope can balance perfectly the overinvestment tendency of specific performance against the underinvestment effect caused by zero liquidated damages. Contracting parties, however, have the incentive to agree to excessively broad CNCs that enable them to extract rents from prospective new employers within the CNC scope. The law should be wary of this incentive in policing CNCs.
This paper studies the phenomenon of early hiring in entry-level labor markets affected by social networks. We offer a model in which information is revealed over time. At first, workers have noisy information about their own ability. The early information is ‘soft’ and non-verifiable, and workers can convey the information credibly only to firms that are connected to them. Later on, ‘hard’ accurate verifiable information becomes available. We characterize the effects of changes to the network structure on the unraveling of the market towards early hiring. Moreover, we show that an efficient design of the matching procedure can prevent unraveling.
Federal investigators must obtain permission from two authorities before wiretapping suspects: first from the Department of Justice (DOJ) and then from a court. The DOJ imposes a higher standard on the use of wiretaps than courts do, and, as a result, all wiretap applications reaching federal judges are legally sufficient and receive judicial approval. In this setting, prosecutors have no incentive to seek review from favorable judges, and a judge’s identity should not correlate with the number of wiretap applications received. The paper tests this prediction using all wiretaps in federal criminal investigations during the years 1997–2007. Consistent with the prediction, judicial characteristics such as ideology and prior professional experience do not influence the number of wiretap applications a judge receives. But African American judges receive substantially fewer wiretap applications, even after numerous judicial and district characteristics are controlled for. The paper investigates several potential explanations for this disparity.
This paper explores information disclosure in matching markets, e.g. the informativeness of transcripts given out by universities. We show that the same amount of information is disclosed in all equilib- ria. We then demonstrate that if universities disclose the equilibrium amount of information, students and employers will not find it prof- itable to contract early; if they disclose more, unraveling will occur.
This note describes the unraveling of transaction dates in several markets, including the labor markets for new lawyers hired by large law firms and for gastroenterology fellows, and the market for post-season college football bowls. Together these will illustrate that unraveling can occur in markets with competitive prices, that it can result in substantial inefficiencies, and that marketplace institutions play a role in restoring efficiency. (All of these contradict the conclusions of Priest, 2010). I’ll conclude with open questions about the role of marketplace institutions and the timing of transactions.
The collapse of the clearinghouse for the entry-level gastroenterology labor market offers a unique opportunity to study how stable clearinghouses succeed and fail. To explore the reasons for the failure of the clearinghouse (and why failures of this kind of clearinghouse have been so rare), we conduct an experimental investigation of demand shocks of the kind that occurred in the gastroenterology market. We find that a reduction in demand for positions leads to the collapse of the match only when it is detectable by firms before being detected by workers (as in the unexpected shock that took place in 1996, which could be seen by firms in their reduced applicant pools). Simple demand and supply imbalances do not seem to interfere with the operation of the centralized match. Our results suggest an affirmative answer to the question posed by market participants about whether the clearinghouse could be successfully restarted, and that this would relieve some of the distress now reported in that market, by allowing it to operate later, at a more uniform time, and with more national scope.Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.
In this Essay, I propose that judicial behavior is best understood as a function of the incentives and constraints that particular legal systems place on their judges. The approach is thus an economic one, but it is also commonsensical, has broad empirical support, and, of particular relevance to this Symposium, has strong implications for assessing judicial performance and performance-based criteria for ju- dicial promotion. This Essay contains no original empirical research, but seeks to provide a framework for interpreting and guiding em- pirical studies of judicial behavior. An immediate and important implication of the approach is that judicial behavior is likely to differ across national legal systems and indeed within a nation's legal systems to the extent that components of the system (such as the different jurisdictions in the United States) differ in the incentives and constraints that they impose on judges. And still another implication is that the orthodox notion that judges merely interpret and apply law is unlikely to hold in all or even most legal systems. Another is that the criteria of judicial per- formance are relative to the incentives and constraints that deter- mine judicial behavior. In some judicial systems, a judge's reversal rate might be a critical performance criterion, while in others more weight would be placed on how often a judge's opinions were cited by other courts or even on the political acumen exhibited by the judge in his opinions. It is a mistake to suppose that one performance crite- rion or set of such criteria should be applicable to all judges. I will pause from time to time in my analysis of judicial behavior to spell * Judge, U.S. Court of Appeals for the Seventh Circuit, and senior lecturer, the University of Chicago Law School. This Essay was prepared for the Florida State Univer- sity Law Review's symposium, Empirical Measures of Judicial Performance. I thank Bryan Jenkins, Jonathon La Chappelle, Viktoria Lovei, Meghan Maloney, and Liss Palamkunnel for their very helpful research assistance and Andrei Shleifer for very helpful comments on a previous draft.
A great deal of late bidding has been observed on internet auctions such as eBay, which employ a second price auction with a fixed deadline. Much less late bidding has been observed on internet auctions such as those run by Amazon, which employ similar auction rules, but use an ending rule that automatically extends the auction until at least ten minutes have passed without a bid. This paper reports an experiment that allows us to examine the effect of the different ending rules under controlled conditions, without the other differences between internet auction houses that prevent unambiguous interpretation of the field data. We find that the difference in auction ending rules is sufficient by itself to produce the differences observed in the field data. The experimental data also allow us to draw conclusions about the effect of auction design on efficiency, revenue, and the speed with which bidders learn to approximate equilibrium behavior.
Markets sometimes unravel in time, with offers becoming inefficiently early. Often this is attributed to competition arising from an imbalance of demand and supply. However this presents a puzzle, since unraveling can only occur when firms are willing to make early offers and workers are willing to accept them. We present a model and experiment in which workers' quality becomes known only in the late part of the market, but in which matching can occur (inefficiently) early (only) when there is comparable demand and supply: a surplus of applicants, but a shortage of high quality applicants. Under these circumstances, some applicants are willing to accept jobs before they know their quality, since they may remain unmatched if they turn out to have low quality. And some firms make early offers to workers, since this is their only chance of hiring a high quality worker. * The preliminary version of this study reporting pilot experiments and the latest version were presented at the ESA Meetings in Pittsburgh and Tucson, at the Winter ES Meeting in Philadelphia, and at NYU. We thank the participants for comments. Of course, all possible errors are our own responsibility. We used the Z-Tree software (Fischbacher, 2007) in our experiment. We would like to gratefully acknowledge the support of the NSF.
This paper shows how the internal job market for participants in the IMF Economist Program (EPs) could be redesigned to eliminate most of the shortcomings of the current system. The new design is based on Gale and Shapley`s (1962) Deferred Acceptance Algorithm (DAA) and generates an efficient and stable outcome. An Excel-based computer program, EP-Match, implements the algorithm and applies it to the internal job market for EPs. The program can be downloaded from http://www.people.hbs.edu/gbarron/EP-Match_for_Excel.html.
The large literature on costly signaling and the somewhat scant literature on preference signaling had varying success in showing the effectiveness of signals. We use a field experiment to show that even when everyone can send a signal, signals are free and the only costs are opportunity costs, sending a signal increases the chances of success. In an online dating experiment, participants can attach “virtual roses” to a proposal to signal special interest in another participant. We find that attaching a rose to an offer substantially increases the chance of acceptance. This effect is driven by an increase in the acceptance rate when the offer is made to a participant who is less desirable than the proposer. Furthermore, participants endowed with more roses have more of their offers accepted than their counterparts.Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.
Excessive borrowing, no less than insufficient savings, might be a product of bounded rationality. Identifiable psychological mechanisms are likely to contribute to excessive borrowing; these include myopia, procrastination, optimism bias, "miswanting," and what might be called cumulative cost neglect. Suppose that excessive borrowing is a significant problem for some or many; if so, how might the law respond? The first option involves weak paternalism, through debiasing and other strategies that leave people free to choose as they wish. Another option is strong paternalism, which forecloses choice. Because of private heterogeneity and the risk of government error, regulators should have a firm presumption against strong paternalism, and hence the initial line of defense against excessive borrowing consists of information campaigns, debiasing, and default rules. On imaginable empirical findings, however, there may be a plausible argument for strong paternalism in the form of restrictions on various practices, perhaps including "teaser rates" and late fees. The two larger themes, applicable in many contexts, involve the importance of an ex post perspective on the consequences of consumer choices and the virtues and limits of weak forms of paternalism, including debiasing and libertarian paternalism.
The treaty creating the WTO replaced the GATT dispute resolution system, which contained no formal sanctions for breach of agreement as a practical matter, with a system that results in centrally authorized sanctions against recalcitrant violators of WTO trade agreements. We examine the important features of the new system, and argue that the institutionalization of a sanctioning mechanism was not motivated by a perceived need to increase the penalty. In particular, the GATT system relied on unilateral retaliation and reputation to police the bargain, and toward its end unilateral retaliation became excessive, interfering with opportunities for efficient breach. The WTO mechanism for arbitrating the magnitude of proposed sanctions is the major innovation under WTO law, and ensures that sanctions are not set too high.
Rank ordering is a crude but economical method of conveying information that assists consumers (such as prospective law students) to make choices; hence the popularity of the law school rankings by U.S. News & World Report. However, the validity of USNWR's rankings are undermined by the arbitrary weights attached to the different factors on which the rankings are based. This paper explores a variety of alternatives, beginning with the mean LSAT score of the student body, and emphasizes that the design of a ranking system is relevant to the interest of the people whom the rankings are intended to guide. There is broad convergence of plausible systems of ranking law schools, but it is possible to improve on the USNWR rankings.
While a number of recent books and articles have closely examined the hiring and utilization of United States Supreme Court law clerks, much less is known about the selection and employment of lower federal court law clerks. This lack of knowledge is particularly pronounced for federal district court law clerks, and the shortage of basic information about such law clerks, combined with the large number of cases processed each year by the federal district courts, suggests that a careful study of federal district court law clerks is long overdue. Using original survey data of 311 active and senior federal district court judges, we take the first step in delineating the institutional rules and norms surrounding the selection and use of law clerks in the federal district courts. Our findings reveal that federal district court judges assign their law clerks a number of substantive job duties, findings which raise important new questions about law clerk influence in the lower federal courts.
The law of corporate reorganizations is conventionally justified as a way to preserve a firm's going-concern value: Specialized assets in a particular firm are worth more together in that firm than anywhere else. This paper shows that this notion is mistaken. Its flaw is that it lacks a well-developed understanding of the nature of a firm. Initially, it is easy to confuse size with specialization and overstate the extent to which assets are dedicated to a particular enterprise. Even when such dedicated assets exist, they often do not need to stay in the same firm. As Coase taught us, as the costs of contracting go down, so too does the value of keeping assets in a particular firm. But even when specialized assets must be kept inside a firm, two other forces limit the need for a traditional law of corporate reorganizations. Capital structures are increasingly designed with financial distress in mind. For these firms, control rights shift from one set of investors to another as the firm encounters difficulty. Such firms either never file for bankruptcy, or, if they do, it is only to vindicate the pre-determined allocation of control rights. Even where control rights are not sensibly allocated, a quick sale of the firm restores order. When firms can be sold as going concerns, the need for the traditional negotiated plan of reorganization disappears. The vast majority of firms in financial distress never enter bankruptcy. Today the Chapter 11 of a large firm is an auction of the assets, followed by litigation over the proceeds. To the extent we understand the law of corporate reorganizations as providing a collective forum in which creditors and their common debtor fashion a future for a firm that would otherwise be torn apart by financial distress, we may safely conclude that its era has come to an end.
In September 1993 the Judicial Conference of the United States unanimously adopted the following resolution: The Judicial Conference recognizes as the Benchmark Starting Date for clerkship interviews March 1 of the year preceding the year in which the clerkship begins. As submitted to the Judicial Conference, the resolution contained the following explanatory note: The Benchmark Starting Date is not meant to be binding. The Conference expects that judges will make a good faith effort not to interview candidates before that date, but special circumstances might sometimes call for an earlier interview. This Benchmark Starting Date will be made known to the law schools, with the suggestion that faculties be urged not to transmit letters of recommendation until approximately February 1, which is about the time when third semester grades are available. The suggestion will also be made that law schools advise students that they are not obliged to accept the first offer tendered (there being widespread confusion on this point).
Judges have both criticized and praised the chaos that is the judicial clerkship process, and many have for years attempted to reform it. This essay by a recent law school graduate provides an applicant's perspective and recommendations for reform. The author analyzes the current unstructured process and criticizes its failure to fully account for the preferences of judges and students, as well as to mitigate the costs to students and the public. In place of the current process, the author sides with proponents of a computerized matching system, like that used to place medical students at hospitals, and discusses its practical implications. Furthermore, noting that past efforts aimed at reform have failed due primarily to lack of adequate enforcement, the author concludes that Congress has both the constitutional authority and the public duty to require judges to use a more rational process to select clerks.
We report on the design of the new clearinghouse adopted by the National Resident Matching Program, which annually fills approximately 20,000 jobs for new physicians in the United States. Because that market exhibits many complementarities between applicants and between positions, the theory of simple matching markets does not apply directly. However, computational experiments reveal that the theory provides a good approximation, and furthermore the set of stable matchings, and the opportunities for strategic manipulation, are surprisingly small. A new kind of core convergence' result is presented to explain this; the fact that each applicant can interview for only a small fraction of available positions is important. We also describe in detail engineering aspects of the design process.Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.
The potential transactions evaluated in labor markets before equilibrium is identified involve rejected offers. After an initial phase in which many offers can be made simultaneously, a new offer cannot be made until an outstanding offer is rejected, so even a small time required to process offers and rejections may cause bottlenecks. In many labor markets, this means that transactions have to be finalized before the market clears. A firm needs to consider the likelihood that its offer will be accepted, since if its offer is rejected other potential employees may become unavailable in the interim. The analysis is carried out in connection with the market for clinical psychologists. Copyright 1997 by the University of Chicago.
Graduate medical education has undergone economic and structural changes-changes that have placed increasing pressure on medical students and programs to match effectively. This study documents the experiences, perceptions, and ethical dilemmas of medical students with the 1998 match process.
Surveyed were 437 senior students from three medical schools. Students were questioned about: interviewing practices, communication with programs, commitments made, ethical dilemmas faced, and the match process itself. Data were analyzed using Student's t test, the chi-square test, and descriptive statistics.
In all, 314 (72%) students responded. Programs expect postinterview communication from students (57%). Students perceive that programs are making "informal" commitments (43%), lying to them (33%), and encouraging their unethical behavior in order to match (21%). Ethical dilemmas are related to requests for informal commitments.
The NRMP's ruling that denounces prematch commitments is being broken by students and programs alike, resulting in the promotion of unprofessional behavior and gamesmanship.
Federal judges looking for impartial scientists to help sift through complex technical evidence will soon have an easy way
to find them. Last week the American Association for the Advancement of Science (publisher of
Science) launched a 5-year pilot project to supply judges with lists of experts who can provide advice in complicated cases, such
as claims of software patent infringement or illness from exposure to a toxic substance. The project is intended to cut through
the legal confusion generated when expert witnesses hired by each side dispute the significance of such evidence.
This paper concerns the labor market for medical interns and residents and how it has evolved from the beginning of the century to the present time. The paper will discuss briefly the history of the various