Publications des chercheurs de PSE

We take a novel approach based on differential games to the study of criminal networks. We extend the static crime network game (Ballester et al., 2006, 2010) to a dynamic setting where criminal activities negatively impact the accumulation of total wealth in the economy. We derive a Markov Feedback Equilibrium and show that, unlike in the static crime network game, the vector of equilibrium crime rates is not necessarily proportional to the vector of Bonacich centralities. Next, we conduct a comparative dynamic analysis with respect to the network size, the network density, and the marginal expected punishment, finding results in contrast with those arising in the static crime network game. We also shed light on a novel issue in the network theory literature, i.e., the existence of a voracity effect. Finally, we study the problem of identifying the optimal target in the population of criminals when the planner’s objective is to minimize aggregate crime at each point in time. Our analysis shows that the key player in the dynamic and the static setting may differ, and that the key player in the dynamic setting may change over time.

Cet article étudie les liens entre les ententes et la corruption sur les marchés publics. Un agent public administre une enchère au premier prix pour allouer une multiplicité de contrats. Cet agent peut, avant l'ouverture officielle des enveloppes, offrir, simultanément à toutes les firmes, la possibilité de corriger une offre déjà soumise. Notre résultat principal est que les intérêts d'un cartel de firmes et ceux d'un agent corrompu sont intimement liés. Une entente anti-concurrentielle donne de la valeur au pouvoir de décision de l'agent. Alors que l'abus de ce pouvoir dans l'objectif d'extraire des rentes implique une punition pour tout firme qui tenterait de dévier de l'accord du cartel. Un second résultat montre qu'une procédure qui permet les offres par paquets rend les ententes de partage de marché plus faciles. Enfin nous trouvons qu'avec la corruption le risque d'entente est relativement plus important lorsque la concurrence n'est pas trop forte. Un message important à l'adresse des autorités de la concurrence et des cours de justice ressort de notre analyse : les risques de corruption et d'entente doivent être traités simultanément. Nous discutons également des implications de l'analyse pour la formulation des procédures de marchés publics.

Nous étudions la nature du biais judiciaire dans les procédures de faillite suite à l'introduction en Russie de la loi de 1998 sur les faillites. Nous trouvons que les caractéristiques politiques du pouvoir régional affectaient les décisions judiciaires quant au nombre et aux types de procédure de faillite engagée après la mise en vigueur de la loi de 1998. Nos résultats soutiennent la thèse selon laquelle les gouverneurs politiquement puissants usaient de cette législation pour dé livrer les entreprises de leurs dettes d'impôts au pouvoir fédéral.

This paper analyzes the interplay between social structure and information exchange in two competing activities, crime and labor. We consider a dynamic model in which individuals belong to mutually exclusive two-person groups, referred to as dyads. There are multiple equilibria. If jobs are badly paid and/or crime is profitable, unemployment benefits have to be low enough to prevent workers for staying too long in the unemployment status because they are vulnerable to crime activities. If, instead, jobs are well paid and/or crime is not profitable, unemployment benefits have to be high enough to induce workers to stay unemployed rather to commit crime because they are less vulnerable to crime activities. Also, in segregated neighborhoods characterized by high interactions between peers, a policy only based on punishment and arrest will not be efficient in reducing crime. It has to be accompanied by other types of policies that take into account social interactions.

Dans cet article nous examinons le rapport empirique entre immigration et crime dans les provinces italiennes pendant la période 1990-2003. Travaillant à partie de données administratives de la police, nous constatons d'abord que la taille de la population immigrée est positivement correlée avec la fréquence des atteintes à la propriété et avec le taux de criminalité dans son ensemble. Puis, nous employons des variables instrumentales basées sur la migration vers d'autres pays européens pour identifier l'impact des changements exogènes de la population immigrée en Italie. Selon ces évaluations, l'immigration augmente seulement la fréquence des vols avec violence, tout en laissant inchangé la fréquence de tous autres types de crime. Puisque les vols avec violence représentent une fraction très mineure de toutes les offenses criminelles, l'effet sur le taux de crime global n'est pas sensiblement différent de zéro.

We wish to thank Andrea Bassanini, Cecilia Garcia-Peñalosa, Tommy Murphy, Tommaso Nannicini and seminar participants at University Bocconi for useful comments and discussions. Charlotte Coutand and Clement Malgouyres provided excellent research assistance. We also thank Pierre-Emmanuel Couralet and Fabien Gaveau who proved crucial in helping us with some of the data. We are grateful to Gilles Postel-Vinay for sharing with us his data on wine and phylloxera and for insightful comments and suggestions. The views expressed in the paper are those of the authors and do not necessarily reflect those of Banque de France or the Eurosystem. The usual disclaimer applies.

During the financial crisis, G20 countries compelled tax havens to sign bilateral treaties providing for exchange of bank information. Policymakers have celebrated this global initiative as the end of bank secrecy. Exploiting a unique panel dataset, our study is the first attempt to assess how the treaties affected bank deposits in tax havens. Rather than repatriating funds, our results suggest that tax evaders shifted deposits to havens not covered by a treaty with their home country. The crackdown thus caused a relocation of deposits at the benefit of the least compliant havens. We discuss the policy implications of these findings.

We analyze risk allocation and contractual choices when public procurement is plagued with moral hazard, private information on exogenous shocks, and threat of corruption. Complete contracts entail state-contingent clauses that compensate the contractor for shocks unrelated to his own effort. By improving insurance, those contracts reduce the agency cost of moral hazard. When the contractor has private information on revenues shocks, verifying messages on shocks realizations is costly. Incomplete contracts do not specify state-contingent clauses, thereby saving on verifiability costs. This makes incomplete contracts attractive even though they entail greater agency costs. Because of private information on contracting costs, a public official may have discretion to choose whether to procure under a complete or an incomplete contract. When the public official is corrupt, such delegation results in incomplete contracts being chosen too often. Empirical predictions on the use of incomplete contracts and policy implications on the benefits of standardized contracts are discussed.

Electronic monitoring (EM) has emerged as a popular tool for curbing the growth of large prison populations. Evidence on the causal effects of EM on criminal recidivism is, however, limited and it is unclear how this alternative to incarceration affects the labor supply of offenders and the outcomes of their family members. We study the countrywide expansion of EM in Sweden in 1997 wherein offenders sentenced to up to three months in prison were granted the option to substitute incarceration with EM. Our difference-in-differences estimates, which compare the change in the prison inflow rate of treated offenders to that of non-treated offenders with slightly longer sentences, show that the reform significantly decreased the number of incarcerations. Our main finding is that EM not only lowers criminal recidivism but also increases labor supply. Additionally, EM improves the educational attainment and early-life earnings of the children whose parents were exposed to the reform. The primary mechanisms through which EM operates appear to involve the preservation of offenders’ ties to the labor market, by reducing the barriers to both finding a job and changing employers. Our calculations suggest that the social benefits stemming from EM are about seven times larger than the fiscal savings associated with reduced prison expenditures, implying that the welfare gains from EM could be much greater than previously acknowledged.

Nous étudions la relation d'agence entre actionnaires et dirigeant d'une entreprise lorsqu'une action illégale est possible. Nous caractérisons en particulier la rémunération optimale proposée par la firme et son implication sur les décisions prises par le dirigeant. Ceci nous amène à évaluer si l'emploi de stock-options demeure ou non optimal dans ce contexte. Nous analysons en outre l'impact de ces schémas de rémunérations en termes de politique publique de lutte contre la fraude d'entreprise et nous montrons que le levier de la détection n'est pas interchangeable avec celui des amendes. Enfin, nous mettons en évidence que les acteurs ont des préférences divergentes quant à la politique publique de détection de ces pratiques illicites.

This paper presents a new theory of crime where leaders transmit a crime technology and act as a role model for other criminals. We show that, in equilibrium, an individual’s crime effort and criminal decisions depend on the geodesic distance to the leader in his or her network of social contacts. By using data on friendship networks among U.S. high-school students, we structurally estimate the model and find evidence supporting its predictions. In particular, by using a definition of a criminal leader that is exogenous to the network formation of friendship links, we find that the longer is the distance to the leader, the lower is the criminal activity of the delinquents and the less likely they are to become criminals. We finally perform a counterfactual experiment that reveals that a policy that removes all criminal leaders from a school can, on average, reduce criminal activity by about 20% and the individual probability of becoming a criminal by 10%.

We develop a two-period overlapping generations model in which both the structure of the family and the decision to commit crime are endogenous and the dynamics of moral norms of good conduct (honesty trait) is transmitted intergenerationally by families and peers. Having a father at home might be crucial to prevent susceptible boys from becoming criminals, as this facilitates the transmission of the honesty trait against criminal behavior. By "destroying" biparental families and putting fathers in prison, we show that more intense crime repression can backfire at the local level because it increases the possibility that criminals' sons become criminals themselves. Consistent with sociological disorganization theories of crime, the model also explains the emergence and persistence of urban ghettos characterized by a large proportion of broken families, high crime rates, and high levels of peer socialization, which reinforce criminal activities. Finally, we discuss the efficiency of segregation, family and education policies in terms of long-term crime rates.