Essays on Law and Economics, Economics of Education, and Public Economics.

Abstract

The three chapters of this dissertation investigate three vastly different questions, bound together by the tools of economic analysis used to answer each. Chapter 1 is a theoretical model that looks at the behavior of rational agents engaged in a risky activity, and how this behavior is affected by legal rules. Chapter 2 is an empirical look at a question that has only become important with the advent of internet technology, namely the effectiveness of online classes relative to the traditional classroom setting. Finally, Chapter 3 examines the behavior of corporations in response to changes in the statutory corporate tax rate. The first chapter examines the efficiency of different accident cost allocation rules, arriving at two important results. Firstly, for a general class of accidents, comparative negligence can induce individuals to take efficient levels of precaution despite evidentiary uncertainty. Drawing on this result, the chapter finds that given the correct cost apportionment rule some uncertainty is welfare improving as it induces efficient precaution and provides proper incentives for individuals to internalize a portion of the social cost of repeated engagement in the activity. Using a proprietary data set, Chapter 2 examines the difference in standardized test outcomes of students enrolled in synchronous online classes relative to their counterparts who take traditional in-person classes. The paper finds that students enrolled in traditional classes on average out-scored their online counterparts by approximately 13 points on the Graduate Management Aptitude Test. To control for possible selection bias, the paper finds that in-person class students outperform online students by between 28 and 45 points using IV and endogenous switching regression estimation. Chapter 3 exploits variation in statutory tax rates for the 1986 fiscal tax year to investigate the extent to which firms engage in intertemporal income shifting for tax purposes. Using financial statement data, the paper compares the income deferral activity of firms with July through November fiscal year ends to those of other firms in the COMPUSTAT panel of firms, finding very little evidence that firms that faced an anticipated rate drop in 1986 were more likely to defer income in 1985.