The Coase Conjecture predicts that a durable-goods monopolist without commitment will rapidly cut price toward marginal cost. We test this prediction in the electronic-book market using release-day prices. To proxy for marginal cost, we use competitive prices of public-domain electronic books on the same platforms. Release-day prices for copyrighted electronic books are far above this cost benchmark-typically more than 30 times higher-and prices remain largely flat over the first month. Sales also persist well beyond release, contradicting immediate market clearing. These patterns are hard to reconcile with standard no-commitment models but are consistent with models featuring commitment to future prices and with outside-option models.

One of the most famous and outstanding formalizations of the Coase Conjecture is by Gul et al. (J Econ Theory 39(1):155–190, 1986. https://doi.org/10.1016/0022-0531(86)90024-4 ) peculiarity of their model—as well as nearly all other examinations of the Coase Conjecture, including that by Coase himself—is that it assumes that the monopolist and customers have the same discount rate. I re-examine their model, while relaxing this restriction. Gul et. al. show that, if the (common) discount rate of the monopolist and customers approaches one, then the Coase Conjecture follows. I show that one only needs the discount rate of the customers to approach one for this to be true. I also show a second result: If the customers’ discount rate is fixed at a value less than one, while the monopolist’s discount rate approaches one, then the Coase Conjecture is guaranteed not to follow.

We introduce a structural econometric model to estimate the extent to which the Chinese government bans U.S. movies. According to our estimates, if a movie has characteristics similar to the median movie in our sample, then the probability is approximately 0.91 that the Chinese government will ban it. During our sample period, 1994-2019, U.S. movies comprised about 28 percent of the Chinese market and sales were about $22.6 billion. However, according to our estimates, if the Chinese government had not banned any U.S. movies, then the latter numbers would have risen to 68 percent and $45.1 billion.

We test the Coase Conjecture by noting the prices of a sample of online books on the day that they were released. To determine marginal costs of online books, we observed prices of books whose copyright had expired. For our sample, initial prices were not even close to marginal costs—the median price was more than ten times marginal costs. We document other empirical regularities that often contradict many existing theories about durable-goods monopolies. We conclude that the theories that best explain these regularities are ones–such as those of Stokey (1979), Sobel (1991), and Board (2008)—that assume that a monopolist can commit to a schedule of future prices.

I consider a bargaining game in which only one player can make proposals and the space of proposals is finite. Thus, the game is like a situation where: (i) a CEO suggests a possible hire, who must be okayed by a board of directors, or (ii) the US president nominates a potential judge, who must be okayed by the Senate. My main result is an algorithm that finds the unique subgame-perfect equilibrium. The number of steps in the algorithm is on the order of n, the number of possibilities (e.g., applicants to a job) that the bargainers may consider. By contrast, if one uses backwards induction to solve the game, then the number of steps is on the order of n !. A corollary of the main result, similar to some results of previous bargaining models, is that the wait costs of only one player, the non-proposer, is relevant to the outcome. The wait costs of the proposer are irrelevant, provided that they are positive. Applied to the nomination process specified by the US Constitution, the corollary suggests that only the Senate's wait costs are relevant to the outcome-the president's wait costs are irrelevant. As I argue, this result may explain a little-noticed regularity of American politics. This is that the Senate seems to have much influence in the selection of lower-court judges but relatively little influence in the selection of Supreme Court justices.

In this paper I re-examine data from Cai and Wang's (2006) laboratory simulation of the Crawford-Sobel "strategic information transmission" game. Cai and Wang focus on the amount of information that senders in the game transmit to receivers, and largely ignore any effects of the bias of the information. More specific, Cai and Wang (and nearly all other researchers of whom I am aware) do not examine what I call the no-policy-bias implication of the Crawford-Sobel game. This implication is that the final policy that receivers choose, in expectation, should equal the policy that they would have chosen had the senders sent no signal. That is, the receivers should rationally discount any bias in the signals, and the senders should not be able systematically to fool the receivers. However, contrary to the theory of the Crawford-Sobel game, in practice, all versions of the Cai-Wang experiment produced a policy bias. Further, the bias was systematic—it was always in the direction that the senders preferred. Elsewhere (Groseclose, 2011) I estimate the media lambda, a number between zero and one that expresses the degree to which a signal sender can fool a receiver. The results of the Cai-Wang experiment produce a media lambda of approximately .32.

One of the most famous and outstanding formalizations of the Coase Conjecture is that by Gul, Sonnenschein, and Wilson (1986). A peculiarity of their model — as well as all other examinations of the Coase Conjecture of which I am aware, including that by Coase himself — is that it assumes that the monopolist and customers have the same discount rate. I re-examine their model, while relaxing this restriction. Gul, Sonnenschein, and Wilson show that, if the (common) discount rate of the monopolist and customers approaches one, then the Coase Conjecture follows. I show that one only needs the discount rate of the customers to approach one for this to be true. I also show a second result: If the customers’ discount rate is fixed at a value less than one while the monopolist’s discount rate approaches one, then the Coase Conjecture is guaranteed not to follow.

I consider a bargaining game in which, unlike the standard economic bargaining game (e.g. Rubenstein, 1982), only one player can make proposals. I also assume that the space of proposals is finite. Thus, the game is akin to (i) a CEO’s proposing a hire who must be okayed by a board of directors, or (ii) the U.S. president’s proposing a judge or cabinet member, who must be okayed by the Senate. I derive an algorithm that finds the unique subgame-perfect equilibrium to the game. As the algorithm reveals, a surprising aspect of the game is that only the wait costs of the non-proposer are relevant. The wait costs of the proposer are irrelevant. My review of the literature suggests that this result holds more generally: In bargaining games the patience of the proposer seems to be less important than the patience of the other players.

Cai and Wang (2005) conducted a laboratory simulation of the Crawford-Sobel “strategic information transmission” game. The researchers were most interested in observing the amount of information that senders in the game transmitted to receivers. Consequently, they did not examine what I call the no-policy-bias implication of the game. This implication is that - as the Nash equilibria to the game predict - the final policy that receivers choose, in expectation, should equal the policy that they would have chosen if the senders had sent no signal. That is, the senders should not be able to systematically fool the receivers. Contrary to the Nash equlibria, however, all versions of the experiment produced a policy bias. The results can be explained by a well-established empirical regularity documented by behavioral economists. This is that people tend to under-estimate the degree to which other people are strategic. I apply these results to the question of media effects. The Cai-Wang results - as well as the models of behavioral economists - suggest that real-world journalists should indeed be able to significantly affect the thoughts and behavior of real-world news consumers.

As I document in this note, the party of a candidate for a U.S. House or Senate seat cannot be too out-of-line with his or her district. Specifically, if the district is more than 13 points different from the candidate’s party (as judged by the most recent presidential election), then he or she has essentially zero chance of winning. In an earlier version of this note (published on Ricochet.com, approximately one week before the 2014 midterm elections), I used the Rule to make predictions about four races: the Kentucky and Arkansas senate races and the 2nd and 3rd House races in West Virginia. All four predictions were correct even though many pundits called the races tossups or near-tossups. The rule predicts that Senator Joe Manchin (D-W.V.) has no chance of winning reelection in 2018 (unless Manchin becomes a Republican or West Virginia voters trend significantly leftward during the next few years).

Elsewhere (Groseclose and Milyo 2010), we examine a game where each legislator has preferences over (i) the resulting policy and (ii) how he or she votes. The latter preferences are especially important when the legislator is not pivotal. We show that when the game follows the normal rules of legislatures—most important, that legislators can change their vote after seeing how their fellow legislators have voted—then the only possible equilibrium is one where all legislators ignore their policy preferences. That is, each legislator votes as if he or she is not pivotal. The result, consistent with empirical studies of Congress, suggests that legislators should tend to vote sincerely, rather than sophisticatedly. In this paper we examine how outcomes change if we change the rules for voting. Namely, instead of a simultaneous game, we consider a game where legislators vote sequentially in a pre-determined order. We show that, opposite to the simultaneous game, an alternative wins if and only if a majority of legislators’ policy preferences favor that alternative. Our results suggest that if Congress adopted this change in rules, then sophisticated voting would become frequent instead of rare.

Dr. Tim Groseclose, a professor of science and economics at UCLA, has spent years constructing precise, quantitative measures of the slant of media outlets. He does this by measuring the content of news, as a way to measure the PQ, or political quotient of voters and politicians. Among his conclusions are: all mainstream media outlets have a liberal bias; and while some supposedly conservative outlets - such the Washington Times or Fox News' Special Report - do lean right, their conservative bias is less than the liberal bias of most mainstream outlets.

Cai and Wang (2005) conducted a laboratory simulation of the Crawford-Sobel “strategic information transmission” game. The researchers were most interested in observing the amount of information that senders in the game transmitted to receivers. Consequently, they did not examine what I call the no-policy-bias implication of the game. This implication is that—as the Nash equilibria to the game predict—the final policy that receivers choose, in expectation, should equal the policy that they would have chosen if the senders had sent no signal. That is, the senders should not be able to systematically fool the receivers. Contrary to the Nash equlibria, however, all versions of the experiment produced a policy bias. The results can be explained by a well-established empirical regularity documented by behavioral economists. This is that people tend to under-estimate the degree to which other people are strategic. I apply these results to the question of media effects. The Cai-Wang results—as well as the models of behavioral economists—suggest that real-world journalists should indeed be able to significantly affect the thoughts and behavior of real-world news consumers.

rule, yet many policymakers, scholars, and concerned citizens perceive the existence of a competitiveness crisis in the United States today. As the introductory chapter to this volume notes, U.S. House races are becoming increasingly uncompetitive; this is no mean feat, as reelection rates for House incumbents have been in the 90 percent range for much of the postwar era. If the dearth of electoral competition is a problem, what is the solution? One popular remedy among “good government” groups and policymakers is campaign finance reform, especially partial or complete public funding of campaigns. Campaign finance reform addresses what many perceive to be the central problem with elections: money. It can easily cost a million dollars to run a competitive House race these days, and upwards of $5 million to do the same in the Senate. Races for governor far exceed these figures and sometimes cost in excess of $100 million. The high cost of campaigning is thought to be a barrier for challengers, who have relatively more difficulty raising funds, especially from political action committees (PACs) and other organizations 12 State Campaign Finance Reform, Competitiveness, and Party Advantage in Gubernatorial Elections

An asymmetry exists in the empirical literature on sophisticated voting in Congress. All studies that find supporting evidence of sophisticated voting have been only piecemeal-that is, they examine only one or a few roll calls. In contrast, the studies that systematically study many roll calls conclude that sophisticated voting is, at best, very rare. We are aware of three such systematic studies-those by Poole and Rosenthal (1997), Wilkerson (1999), and Ladha (1994). While Ladha's study has gone relatively unnoticed, we reexamine his results and explain why they may be the most important of all empirical work on sophisticated voting. In addition, we introduce a theoretical model, and we show how it, along with some subtle aspects of the rules for voting in the House and Senate, provides a rational-choice explanation for the lack of sophisticated voting in Congress.

An asymmetry exists in the empirical literature on sophisticated voting in Congress. All evidence supporting sophisticated voting has been only piecemeal. That is, the studies that nd sophisticated voting examine only one, or at most a few, roll call votes. In contrast, the studies that claim that sophisticated voting is rare tend to be systematic examinations of many roll calls. We are aware of three such systematic studies|those by Poole and Rosenthal (1997), Wilkerson (1999), and Ladha (1994). While Ladha’s study has gone relatively unnoticed by scholars, we re-examine his results and explain why they may be the most important of all empirical work on sophisticated voting. In addition, we introduce a theoretical model, and we show how it, along with some subtle aspects of the rules for voting in the House and Senate, provides a rational-choice explanation for the lack of sophisticated voting in Congress. Finally, we suggest that scholars have not fully considered the implications of a world where legislators cannot vote sophisticatedly. One of the most interesting implications involves models that incorporate the separation-of-powers aspect of U.S. lawmaking. Unlike the assumptions of many previous models, we show that it is not appropriate to assume that such bodies will act as a single individual, even when the conditions of Black’s median voter theorem are satised. Accordingly, the legislatures in such

I examine a model of majority rule in which alternatives are described by two characteristics: (1) their position in a standard, left-right dimension, and (2) their position in a good-bad dimension, over which voters have identical preferences. I show that when voters’ preferences are single-peaked and concave over the first dimension, majority rule is transitive, and the majority’s preferences are identical to the median voter’s. Thus, Black’s (The theory of committees and elections, 1958) theorem extends to such a “one and a half” dimensional framework. Meanwhile, another well-known result of majority rule, Downs’ (An economic theory of democracy, 1957) electoral competition model, does not extend to the framework. The condition that preferences can be represented in a one-and-a-half-dimensional framework is strictly weaker than the condition that preferences be single-peaked and symmetric. The condition is strictly stronger than the condition that preferences be order-restricted, as defined by Rothstein (Soc Choice Welf 7:331–342;1990).

It is well-known that if researchers gather a truncated sample, then they will bias their regression estimates. For instance, such estimates will attenuate from their true value toward zero, if the the errors of the regression follow a normal distribution (Heckman, 1979). I analyze cases where the sample is extremely truncated—that is, where the threshold for selecting the sample approaches infinity, making the sample infinitesimally small relative to the population. I prove that when this happens, regression estimates do not just attenuate, they become zero or reverse signs. I illustrate this theoretical result with three empirical examples. The first examines how the personal wealth of politicians can affect their ability to win elections. While this ability is surely greater if a candidate is rich, if a sample only includes incumbents of the U.S. House (that is, the tiny portion of the population who have proven themselves to be top campaigners), then we find the opposite. Another illustration shows that, although white sprinters seem to be slower than black sprinters, white sprinters who pass a certain threshold tend to run faster than the black sprinters who pass the same threshold. A third illustration shows that, although it is reasonable to believe that people with high SAT scores will earn more income than those with low scores, if we look only at people who attended elite universities, then we find the opposite.