KECD 2300 - Topics in Political, Public and Organizational Economics

Plan of the course :
In this course, we will present recent research in law and economics, in public economics, and in organizational/behavioral economics. The objective of the class is to guide students in the development of their own research questions.


The class is divided into three blocks, organized as follows:

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Block 1: Topics in Law, Economics and Institutions (Roberto Galbiati) :

This block will be organized around three topics. In each session we will introduce the topic and discuss some recent research. Our aim is not to provide an in-depth and exhaustive review of each topic, instead we will try to discuss some ideas to stimulate students' own research.

1 Introduction to the economics of crime and justice: labor markets and crime; law enforcement:

- Becker, Gary S. 1968. “Crime and Punishment: An Economic Approach.” Journal of Political Economy, 76 (March/April): 169–217.
- Britto, D., Pinotti, P., Sampaio, B. (2022). The Effect of Job Loss and Unemployment Insurance on Crime in Brazil. Econometrica
- Fougere, D., F. Kramarz and J. Pouget (2009). Youth unemployment and crime in France, Journal of the European Economic Association, 7(5), 909–38.
- Caroli, E., Bignon, V. and Galbiati, R. Stealing to Survive: Crime in XIXth Century France. Economic Journal 127(559), pp. 19-49 2017 Drago, F. Galbiati, R. and Vertova P “The Deterrent Effects of Prison Evidence from a Natural Experiment”. Journal of Political Economy, 117(2), pp. 257-280
- Drago, F., Galbiati, R. and Vertova P. (2009) The Deterrent Effect of Prison. Journal of Political Economy

2 Introduction to the economics of crime and justice: Judicial behavior

- D. Abrams, R. Galbiati, E. Henry and A. Philippe When in Rome... On Local Norms and Sentencing Decisions . CEPR WP
- Shamena Anwar & Patrick Bayer & Randi Hjalmarsson, 2012. "The Impact of Jury Race in Criminal Trials," The Quarterly Journal of Economics, Oxford University Press, vol. 127(2), pages 1017-1055

3 Introduction to the economics of crime and justice: Are we all equal before the law?

- Becker, Gary S., The Economics of Discrimination, University of Chicago Press, 1957
- Amanda Agan, Sonja Starr, Ban the Box, Criminal Records, and Racial Discrimination: A Field Experiment, The Quarterly Journal of Economics, Volume 133, Issue 1, February 2018, Pages 191–235,
- Persico, Nicola, “Racial Profiling? Detecting Bias Using Statistical Evidence”, Annual Review of Economics

4 Inequality and political institutions

- Scheve, Kenneth F. and Stasavage, David, Wealth Inequality and Democracy (May 2017). Annual Review of Political Science, Vol. 20, pp. 451-468, 2017,
- Diego Puga and Daniel Trefler, International Trade and Institutional Change: Medieval Venice's Response to Globalization, The Quarterly Journal of Economics 129 (2) (2014), 753–821
- Belloc, M. Drago, F., Fochesato, M. and Galbiati, R. Wealth Accumulation and Institutional Capture: the Rise of the Medici and the Fall of the Florentine Republic. CEPR DP (July 2022)

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Block 2: Topics in Organizational and Behavioral Economics (Franz Ostrizek) :

This part of the course explores overconfidence within organizational contexts, examining its implications on individual and corporate decision-making drawing from theoretical and empirical research. After an introduction of the different notions of overconfidence, its prevalence and pitfalls of measurement, we turn to the role of overconfidence in corporate leadership. We then move to employee behavior, project choice and the resulting labor market dynamics. Finally, we study the behavioral-cognitive mechanisms that allow overconfidence to persist despite frequent feedback.

5 Overconfidence in Organizations: Overview and Measurement

- Santos-Pinto, Luis, and Leonidas Enrique de la Rosa. 2020. “Overconfidence in Labor Markets.” In Handbook of Labor, Human Resources and Population Economics, ed. Klaus F. Zimmermann. Cham: Springer International Publishing, 1–42.
- Benoît, J.-P. and Dubra, J. (2011). “Apparent Overconfidence.” Econometrica, 79: 1591-1625.
- Benoît, Jean-Pierre, Juan Dubra, and Don A. Moore. 2015. “Does the Better-than-Average Effect Show That People Are Overconfident?: Two Experiments.” Journal of the European Economic Association, 13(2): 293–329.

6 CEO Overconfidence

- Malmendier, Ulrike, and Geoffrey Tate. 2005. “CEO Overconfidence and Corporate Investment.” The Journal of Finance, 60(6): 2661–2700.
- Goel, Anand M., and Anjan V. Thakor. 2008. “Overconfidence, CEO Selection, and Corporate Governance.” The Journal of Finance, 63(6): 2737–84.
- Hirshleifer, David, Angie Low, and Siew Hong Teoh. 2012. “Are Overconfident CEOs Better Innovators?” The Journal of Finance, 67(4): 1457–98.
- Malmendier, Ulrike. 2018. “Behavioral Corporate Finance.” In Handbook of Behavioral Economics: Applications and Foundations 1, eds. B. Douglas Bernheim, Stefano DellaVigna, and David Laibson. North-Holland, 277–379.

7 Organizational Outcomes and Project Choice

- Hoffman, Mitchell, and Stephen V. Burks. 2020. “Worker Overconfidence: Field Evidence and Implications for Employee Turnover and Firm Profits.” Quantitative Economics, 11(1): 315–48.
- Orhun, Yeşim, Alain Cohn, and Collin B. Raymond. 2024. “Motivated Optimism and Workplace Risk.” The Economic Journal, 134(663): 2951–81.
- Bhaskar, V., and Caroline Thomas. 2019. “The Culture of Overconfidence.” American Economic Review: Insights, 1(1): 95–110.
- Hestermann, Nina, and Yves Le Yaouanq. 2021. “Experimentation with Self-Serving Attribution Biases.” American Economic Journal: Microeconomics, 13(3): 198–237.

8 Persistence: Biased Updating, Self-Serving Beliefs and Memory

- Huffman, David, Collin Raymond, and Julia Shvets. 2022. “Persistent Overconfidence and Biased Memory: Evidence from Managers.” American Economic Review, 112(10): 3141–75.
- Golman, Russell, David Hagmann, and George Loewenstein. 2017. “Information Avoidance.” Journal of Economic Literature, 55(1): 96–135.
- Möbius, Markus M., Muriel Niederle, Paul Niehaus, and Tanya S. Rosenblat. 2022. “Managing Self-Confidence: Theory and Experimental Evidence.” Management Science, 68(11): 7793–7817.
- Zimmermann, Florian. 2020. “The Dynamics of Motivated Beliefs.” American Economic Review, 110(2): 337–63.

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Block 3: Topics in Public Economics (Antoine Ferey) :

This class aims to provide a broad overview of recent topics and methods in public economics, drawing on empirical and theoretical research. After a quick introduction, the first class analyzes recent empirical results on tax incidence and uses this topic to introduce the use of sufficient statistics (a theoretical tool with applications outside of public economics). The second class covers recent works in unemployment insurance to showcase research on social insurance programs. The third class focuses on social transfers and discusses a sufficient statistic metric to compare different policies across domains. The fourth class covers wealth taxation and tax evasion. Important readings are marked with ***.

9 Introduction and tax incidence

- Jensen, A. (2022). Employment structure and the rise of the modern tax system. American Economic Review.
- *** Benzarti, Y (2024). Tax incidence anomalies. (In preparation for) Annual Review of Economics.
- Chetty, R. (2009). Sufficient statistics for welfare analysis: A bridge between structural and reduced-form methods. Annual Review of Economics.

10 Unemployment insurance

- *** Chetty, R., & Finkelstein, A. (2013). Social insurance: Connecting theory to data. Handbook of public economics (Vol. 5).
- Schmieder, J. F., & Von Wachter, T. (2016). The effects of unemployment insurance benefits: New evidence and interpretation. Annual Review of Economics.
- Hendren, N. (2017). Knowledge of future job loss and implications for unemployment insurance. American Economic Review.
- Landais, C., & Spinnewijn, J. (2021). The value of unemployment insurance. The Review of Economic Studies.

11 Social transfers

- Currie, J., & Gahvari, F. (2008). Transfers in cash and in-kind: Theory meets the data. Journal of Economic Literature.
- Piketty, T., & Saez, E. (2013). Optimal labor income taxation. Handbook of public economics (Vol. 5).
- Finkelstein, A., & Notowidigdo, M. J. (2019). Take-up and targeting: Experimental evidence from SNAP. The Quarterly Journal of Economics.
- Hendren, N., & Sprung-Keyser, B. (2020). A unified welfare analysis of government policies. The Quarterly Journal of Economics.

12 Wealth taxation and tax evasion

- *** Saez, E., & Zucman, G. (2020). The rise of income and wealth inequality in America: Evidence from distributional macroeconomic accounts. Journal of Economic Perspectives.
- *** Scheuer, F., & Slemrod, J. (2021). Taxing our wealth. Journal of Economic Perspectives.
- Alstadsæter, A., Johannesen, N., & Zucman, G. (2019). Tax evasion and inequality. American Economic Review.
- Alstadsæter, A., Johannesen, N., & Zucman, G. (2018). Who owns the wealth in tax havens? Macro evidence and implications for global inequality. Journal of Public Economics.

Franz OSTRIZEK,Antoine FEREY,Roberto GALBIATI

Séminaire

English

Autumn 2025-2026

Evaluation : Students will be evaluated on the basis of two homework assignments. - You will write a referee report on a research paper. This means that you must summarize and critically assess the contributions of a paper (that we will assign), analyzing its methodology and results. The referee report cannot exceed 2000 words and counts for 25% of the final grade. Deadline: referee reports are due by Week 6. - You will write a research project. This entails formulating a research question and presenting a methodology that would allow you to advance the research frontier, explaining how this would contribute to the existing research literature on the topic. The research project cannot exceed 3000 words (including footnotes and titles and excluding bibliographic references) and will count for 75% of the final grade. During the first class, we will provide some guideline on how to write a research project. You will have to choose a topic in one of the broad areas of the class by Week 2. Then you well be in contact with one of instructors to discuss the progress of your research project in a meeting that will be arranged around Week 9. Deadline: research projects are due by Week 12.