Private Roads, Public Costs: The Facts About Toll Road Privatization and How to Protect the Public

Provides an overview of trends in toll road privatization and discusses implications for the public, including loss of control, financial risk, and lack of transparency. Proposes principles that would protect the public interest in privatization deals

An Efficient and Decentralized Blockchain-based Commercial Alternative (Full Version)

While online interactions and exchanges have grown exponentially over the past decade, most commercial infrastructures still operate through centralized protocols, and their success essentially depends on trust between different economic actors. Digital advances such as blockchain technology has led to a massive wave of \textit{Decentralized Ledger Technology} (\textit{DLT}) initiatives, protocols and solutions. This advance makes it possible to implement trustless systems in the real world, which, combined with appropriate economic and participatory incentives, would foster the proper functioning and drive the adoption of a decentralized platform among different actors. This paper describes an alternative to current commercial structures and networks by introducing \textit{Lyzis Labs}, which is is an incentive-driven and democratic protocol designed to support a decentralized online marketplace, based on blockchain technology. The proposal, \textit{Lyzis Marketplace}, allows to connect two or more people in a decentralized and secure way without having to rely on a \textit{Trusted Third Party} (\textit{TTP}) in order to perform physical asset exchanges while mainly providing transparent and fully protected data storage. This approach can potentially lead to the creation of a permissionless, efficient, secure and transparent business environment where each user can gain purchasing and decision-making power by supporting the collective welfare while following their personal interests during their various interactions on the network.Comment: 62 pages, 9 figures, 19 table

Observing Unobservables: Identifying Information Asymmetries with a Consumer Credit Field Experiment

Information asymmetries are important in theory but difficult to identify in practice. We estimate the empirical importance of adverse selection and moral hazard in a consumer credit market using a new field experiment methodology. We randomized 58,000 direct mail offers issued by a major South African lender along three dimensions: 1) the initial "offer interest rate" appearing on direct mail solicitations; 2) a "contract interest rate" equal to or less than the offer interest rate and revealed to the over 4,000 borrowers who agreed to the initial offer rate; and 3) a dynamic repayment incentive that extends preferential pricing on future loans to borrowers who remain in good standing. These three randomizations, combined with complete knowledge of the Lender's information set, permit identification of specific types of private information problems. Specifically, our setup distinguishes adverse selection from moral hazard effects on repayment, and thereby generates unique evidence on the existence and magnitudes of specific credit market failures. We find evidence of both adverse selection (among women) and moral hazard (predominantly among men), and the findings suggest that about 20% of default is due to asymmetric information problems. This helps explain the prevalence of credit constraints even in a market that specializes in financing high-risk borrowers at very high rates.Information asymmetries, field experiment, adverse selection, moral hazard, development finance, credit markets, microfinance

Contests for experimentation

We study contests for innovation with learning about the innovation’s feasibility and opponents’ outcomes. We characterize contests that maximize innovation when the designer chooses a prize-sharing scheme and a disclosure policy. A “public winnertakes-all contest” dominates public contests—where any success is immediately disclosed—with any other prize-sharing scheme as well as winner-takes-all contests with any other disclosure policy. Yet, jointly modifying prize sharing and disclosure can increase innovation. In a broad class of mechanisms, it is optimal to share the prize with disclosure following a certain number of successes; under simple conditions, a “hidden equal-sharing” contest is optimal

“Less Is More”: New Property Paradigm in the Information Age?

Before striking down laws increasing copyright’s domain, judges and legislators are asking for evidence that information products will be created even if copyright protection is not provided. The future of Internet technology depends on locating this evidence in time to limit expansive copyright. United States law, however, already protects information products under copyright. Hence, this counterfactual evidence that judges request cannot be generated in the United States. In response to the demand for data, American legal scholars have attempted to mine evidence from open software and other non-commercial endeavors on the Internet. However, these endeavors have been dismissed as exceptions or “cults,” unrelated to mainstream industry needs. This Article, for the first time, provides evidence of growth in the commercial software industry without intellectual property protection. Between 1993 and 2010, the software industry in India emerged as the fastest growing in the world, accounting for $76 billion in revenues by 2010. In the same time period, the software industry in India remained unaffected by changes in intellectual property protection for software. By demonstrating industry growth without strong intellectual property protections, the Indian data fills the critical gap in American literature. Moreover, the comparative data from India enables scholars to separate causality from outcomes in specific empirical and analytical studies emerging out of the United States. In the case study of California’s Silicon Valley, for instance, there is a risk that causality may be extrapolated to alternative California statutes, giving rise to errors of second order. The comparative analysis checks this potential inaccuracy. The industry in India also provides illuminating data from contracting practices—decisive evidence of the legal infrastructure firms need and will create by contract, if not found in a priori law. This study equips policy-makers to go beyond the “historic accident” explanation to understand why the software industry flourishes where it does

Fraudulent Corporate Signals: Conduct as Securities Fraud

Paying a dividend, repurchasing shares, underpricing an initial public offering, pledging collateral, and borrowing using short-term, instead of long-term debt, are all forms of corporate communications. They are “corporate signals” that tell investors certain things about a company’s operations and current financial position, and about the managers’ confidence in its future performance. This Article provides the first comprehensive analysis of the relationship between corporate signals and securities fraud. The incentive to communicate using corporate signals has increased in recent years, a phenomenon that, I argue, is due to the growing complexity of public corporations, and, importantly, to a number of changes in federal securities laws aimed at better deterring fraud and making companies more transparent. The Article makes three major contributions. First, it identifies this deep connection between the use of corporate signals (both truthful and deceptive) and recent changes in securities laws. Second, it identifies significant social costs associated with corporate signaling, which commentators and policymakers have over-looked: signals can encourage stock bubbles, create costly “signaling races,” and lead to the loss of information about companies and industries. Third, it provides a normative account of how a lawmaker could design antifraud provisions under the securities laws in order to reduce total fraud, instead of simply rechanneling deceptive practices from the realm of written and oral statements to that of deceptive corporate signals

Put Your Money Where Your Butt Is: A Commitment Contract for Smoking Cessation

We designed and tested a voluntary commitment product to help smokers quit smoking. The product (CARES) offered smokers a savings account in which they deposit funds for six months, after which they take a urine test for nicotine and cotinine. If they pass, their money is returned; otherwise, their money is forfeited to charity. Of smokers offered CARES, 11 percent took up, and smokers randomly offered CARES were 3 percentage points more likely to pass the 6-month test than the control group. More importantly, this effect persisted in surprise tests at 12 months, indicating that CARES produced lasting smoking cessation. (JEL D12, I12, O15