This article introduces a market-based methodology for evaluating the performance of MBA programs. The authors seek to distinguish the quality of a program from the quality of its students. They judge a program's performance by its value added, measured by the graduates' salaries, after...

When consumers share similar preferences, additional consumers will bring forth products that confer positive "preference externalities" on others. However, if distinct groups of consumers have substantially different preferences, the groups bring forth products with more appeal to themselves...

Mergers can reduce costs and alter incentives about how to position products, so that theory alone cannot predict whether mergers will increase product variety. We document the effect of mergers on variety by exploiting the natural experiment provided by the 1996 Telecommunications Act. We find...

Scholars working on the border of economics and psychology have documented many contexts in which individual decision-making is unreliable and might be improved by paternalistic interventions. Against this mounting body of negative evidence, economists' default belief in consumer sovereignty has...

This paper develops implications of the selection hypothesis of George L. Priest and Benjamin Klein (1984) for the relationship between trial rates and plaintiff win rates. The author finds strong evidence for the selection hypothesis in estimated relationships between trial rates and plaintiff...

Recent research has attempted to document that the financial gains associated with takeovers, LBOs, and other types of restructuring are attributable to subsequent improvements in operating performance. In this paper, the authors develop a more general framework for measuring the effect of...

The Priest/Klein model predicts both trial rates and plaintiff win rates as functions of three structural parameters: the decision standard, parties' uncertainty in estimating case quality, and the degree of stake asymmetry across parties. Previous tests of the model are unsatisfactory because...

Optimal penalty theory predicts that, because imprisonment is costly and fines are costless, fines will be used to the maximum extent possible before they are supplemented with imprisonment. If criminal procedure functions as a market system, as some observers have suggested, then optimizing...

An important result in interest group theory and political economy is that small groups are more influential than their size would lead us to expect. In this study, we document that the opposite holds for political mobilization. Citizens are more likely to participate in elections if they belong...