2015 - Working Papers: Managerial Economics
The people’s perspective on libertarian-paternalistic policies, 36 pp.
A. Arad and A. Rubinstein
(Working Paper No. 5/2015)
Research no.: 00140100
Online experiment is carried out in three countries to examine the non-material welfare implications of libertarian-paternalistic (soft) government interventions. We investigate people’s attitudes towards such interventions and their choices in several hypothetical scenarios of government involvement. We identify a significant proportion of people who (1) think negatively of soft government interventions, (2) forgo the encouraged action presumably in protest against such government interventions even though they would have chosen it otherwise, or (3) prefer the government to only provide information to the public in order to influence their choices rather than an intervention with a more effective choice architecture. In two of the countries, a majority of non-objectors to the soft intervention don’t object to harder interventions either, such as the imposition of taxes. The above findings illuminate the potential welfare loss of a non-negligible portion of the population caused by soft government interventions.
Consumers’ activism: The Facebook boycott of cottage cheese, 44 pp.
I. Hendely, S. Lachz and Y. Spiegel
(Working Paper No. 6/2015)
Research no.: 08640100
We study a consumer boycott on cottage cheese that was organized in Israel on Facebook in the summer of 2011 following a steep increase in prices after price controls were lifted in 2006. The boycott led to an immediate decline in prices which stayed low more than three years after the boycott. We find that (i) demand at the start of the boycott, at the new low prices, would have been 30% higher but for the boycott, (ii) own price elasticities and especially cross price elasticities increased substantially after the boycott, and (iii) post-boycott prices are substantially below the levels implied by the post-boycott elasticities of demand, suggesting that firms lowered prices due to fears of the boycott spreading to other products, of new price controls, and of possibly class action law suits.
The economics of rights: Does the right to counsel increase crime?, 31 pp.
I. Ater, Y. Givati and O. Rigbi
(Working Paper No. 8/2015)
Research no.: 07850100
We examine the broad consequences of the right to counsel by exploiting a legal reform in Israel that extended the right to publicly provided legal counsel to suspects in arrest proceedings. Using the staggered regional rollout of the reform, we find that the reform reduced arrest duration and the likelihood of arrestees being charged. We also find that the reform reduced the number of arrests made by the police. Lastly, we find that the reform increased crime. These findings indicate that the right to counsel improves suspects’ situation, but discourages the police from making arrests, which results in higher crime.
