Ministerial Weights and Government Formation: Estimation Using a Bargaining Model

This paper proposes a method to estimate relative ministerial weights in parliamentary democracies. Specifically, our method combines a bargaining model of government formation with maximum likelihood estimation. The data required for estimation are who formateurs are, what each party’s voting weight is, and what ministerial seats each party obtains. We use 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 statistically 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 effectGovernment Formation, Bargaining

Bargaining and learning in medical malpractice disputes

Lengthy legal procedures and high legal costs are among the main drawbacks of the current litigation system in the United States. This dissertation 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 belief on the probability of winning court judgment and learning takes place as they bargain. In the equilibrium, a trade-off between the extra 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 that 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 three 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. On the other hand, the “loser-pay-all” allocation of legal fees delay resolution and increase costs. Because 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

Bargaining and learning in medical malpractice disputes

Lengthy legal procedures and high legal costs are among the main drawbacks of the current litigation system in the United States. This dissertation 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 belief on the probability of winning court judgment and learning takes place as they bargain. In the equilibrium, a trade-off between the extra 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 that 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 three 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. On the other hand, the “loser-pay-all” allocation of legal fees delay resolution and increase costs. Because 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

Learning and Bargaining in Dispute Resolution: Theory and Evidence from Medical Malpractice Litigation

Bargaining, Learning, Litigation, Dispute Resolution

Estimating Supermodular Games Using Rationalizable Strategies

We propose a set-estimation approach to supermodular games using the restrictons of rationalizable strategies, which is a weaker solution concept than Nash equilibrium. The set of rationalizable strategies of a supermodular game forms a complete lattice, and are bounded above and below by two extremal Nash equilibria. We use a well-known alogrithm to compute the two extremal equilibria, and then construct moment inequalities for set estimation of the supermodular game. Finally, we conduct Monte Carlo experiments to illustrate how the estimated confidence sets vary in response to changes in the data generating process. Copyright © 2013 by Emerald Group Publishing Limited

Ministerial Weights and Government Formation: Estimation Using a Bargaining Model

This article proposes a method to estimate relative ministerial weights in parliamentary democracies. Specifically, we present a bargaining model of government formation and estimate structural parameters of the model using data for (i) who the formateurs are, (ii) what each party's voting weight is, and (iii) what ministerial seats each party obtains. We also measure the effects of voting weights and formateur advantage on bargaining results. We apply our proposed method to the case of Japan. Our estimation results show that political players value pork-related posts (such as the Minister of Construction) much more than prestigious ones (such as the Minister of Foreign Affairs). We also find that there is a significant formateur advantage, whereas voting weights do not have a significant scale effect, which is consistent with the findings for European democracies. The Author 2007. Published by Oxford University Press on behalf of Yale University. All rights reserved. For permissions, please email: [email protected], Oxford University Press.