no slide title · a modified gilson and mnookin payoff matrix would look like the following: the...

George Mason University School of Law Law & Economics Center

18 U.S.C. Section 201(c)(2):

Whoever -

(2) directly or indirectly, gives, offers, or promises anything of value to any person, for or because of the testimony under oath or affirmation given or to be given by such person as a witness upon a trial, hearing, or other proceeding, before any court, any committee of either House or both Houses of Congress, or any agency, commission, or officer authorized by the

absence therefrom, shall be fined under this title or imprisoned for not more than two years, or both.

Agreement:

Government would file a motion under USSG Section 5K1.1 or 18 U.S.C. Section 3553(e) if,

Government promised not to prosecute Mr. Douglas for any other violations of the Drug Abuse Prevention and control Act stemming from his activities currently under investigation, except perjury or related offenses


U.S. v. Singelton, 144 F.3d 1343 (10th Cir. 1998).

Original Panel Decision (Singleton I) vacated 10 days later by 10th Circuit.En banc 10th Circuit affirmed convictions by a 9-3 margin (Singleton II, 165 F.3d 1297 (1999)).

sovereign capacity.

Ingrained practice of granting leniency has created a vested sovereign prerogative.

Near unanimous rejection of Singleton I in other circuits.


Reaction to Singleton I

18 U.S.C. 201(b)(3)

Whoever -

(3) directly or indirectly, corruptly gives, offers, or promises anything of value to any person, or offers or promises such person to give anything of value to any other person or entity, with intent to influence the testimony under oath or affirmation of such first-mentioned person as a witness upon a trial, hearing, or other proceeding, before any court, any committee of either House or both Houses of Congress, or any agency, commission, or officer authorized by the laws of the United States to hear evidence or take testimony, or with intent to influence such person to absent himself therefrom;


U.S. v. Singelton, 144 F.3d 1343 (10th Cir. 1998).

Lucero concurrence

Would imply the prosecutor could pay cash (see U.S. v. Anty (4th Cir. 2000) U.S. v Barnett (5th Cir. 1999) U.S. v. Albanses (8th Cir. 1999) U.S. v. Harris (8th Cir 1999) allowing cash payments by police or prosecutors).Would instead emphasize conflict with other statutes

Sentencing Reform Act and portions of sentencing guidelinesFederal Immunity statute

Theory of conflicts and exceptions: allow payments when absence of payments would result in the loss of information, e.g., where admissible testimony could not be compelled

18 U.S.C 201(d) (allows the payment of a reasonable fee paid in exchange for expert testimony)Immunity StatutePayments to witnesses that will suffer as a result of their testimony?

Application to the prosecutor, but also to defense counsel?Disclosure of payments should be required.


Reaction to Singleton I


Effect of Singleton I

Baker Discloses AllInformation

Baker only DisclosesFavorable Information

Able Discloses AllInformation

A=50B=50

A=30-15=15B=70

Able only DisclosesFavorable Information

A=70B=30-15=15

A=50-15=35B=50-15=35


Ronald J. Gilson & Robert H. Mnookin, Disputing through Agents: Cooperation and Conflict between Lawyers in Litigation, 94 Colum. L. Rev. 509 (1994).

In the infinitely repeated case, we must specify what the dynamic outcomes are. One possible assumption is that cooperation is followed by cooperation, but a defection is followed by permanent defection (trigger strategy punishment). The payoff to cooperating forever equals:(1) 50 + 50/r, where r is the appropriate discount rate (note that the sum of 1/(1+r) from t=1 to infinity equals 1/r).

The payoff to cheating this period, assuming that the other party will cooperate equals:(2) 70 + 35/r.

If the other party also cheats, then the lifetime payoff equals(3) 35 + 35/r

Note that (3) is dominated by (1), so cooperation will be supported if there is immediate detection and punishment.

If there is delayed detection and punishment, then (2) will dominate (1) if 50 + 50/r > 70 + 35/r, or equivalently if r < 3/4. That is, if interest rates a less than 75% per period, cooperation will dominate defection in this game. Given that real interest rates have run around 3% per year, the infinitely repeated prisoners dilemma with trigger strategies seems


Cooperation and the Infinitely Repeated PD


second period of a twice repeated prisoners dilemma game. This is the standard one-shot game (by assumption, there are not further periods). Thus, the outcome of this game is that both parties defect.

Now consider the first period. Given that both parties know that defection will occur in the second, the fact that another period exists does not give the players any additional reason to cooperate. Thus, the first period will also result in defection by both sides.

It is easy to see that this last period unraveling will occur with any number of finitely repeated games. Even if there are a large, but finite number of periods, the logic of backwards induction implies that cheating will occur in the first round.

Finitely Repeated PD & the Last Period Problem


Cooperation and the Finitely Repeated PDWhile this seemingly dismal prediction is correct in theory, experimental recreations of the

-for-tat in fact dominates other strategies. (Axelrod) Tit-for-Tat simply requires a player to mimic the previous strategy of the rival:

c if other player plays c in the previous period.f if other player plays f in the previous period.

Gilson and Mnookin note that if your adversary chooses non-reputable lawyer, then you choose a firm with a reputation for toughness (e.g. Sullivan and Cromwell, see note 13). Turn game into commitment to tit for tat strategy.

Problem with tit for tat strategy - defect due to noisy signal (same for trigger strategy). Tit for tat does not work well if the signal is noisy. See Nalebuff and Dixit at 106-113.

c is misinterpreted by B as an f. Gilson & Mnookin argue that such errors are likely to occur in complex commercial litigation, thus making use of cooperative reputations costly in this area.

Under tit-for-tat we get alternating punishments. Suppose that in period 2 A plays c but it is miscommunicated to B as f. The play will be:A: c c c f c f c fB: c c f c f c f c


Cooperation and the Finitely Repeated PD

Recent experiments updating famous experiment have shown that a strategy nicknamed Pavlov will dominate Tit for Tat.

A Pavlovian avoids punishment (switches) if he comes out behind (when is in the punishment stages c,f or f,f).

Otherwise, he continues his current strategy (i.e., he continues cooperation if c,c, but is not bothered by continuing to take advantage of a sucker in f,c).

Pavlov strategy:

Switch from c to f other player plays f. Stay with f if other player plays cStay with c if c,c, or Switch to c if f,f

Advantage over Tit-for-tat is that accidental punishment does not persist. That is, in contrast to tit-for-tat, Pavlov switches out of punishment quickly. Under Pavlov, we get the following sequences of events after the same period 2 misinterpretation:

A: c c c f c c cB: c c f f c c c


Is Voluntary Disclosure a PD?Much of the current concern over discovery abuse has not been over the costs of formulating the request, the major cost assumed by Gilson and Mnookin. Rather, the major cost is the cost of responding to a request.

Certainly, under the initial disclosures under the 1993 Amendments to Rule 26(a)(1), the costs of formulating a request have in effect fallen to zero. Note that disclosing all relevant information, as required under the new rules, would require each party to incur much of the costs of responding up front. Indeed, the assumptions turn the Gilson and Mnookinanalysis on its head. A modified Gilson and Mnookin payoff matrix would look like the following:

The highest compliance costs are when the party voluntarily discloses. If a party is served with a discovery request, he has lower compliance costs. Here, the same equilibrium holds (only disclose favorable information), but this is the relatively efficient equilibrium, as the costs of compliance are lower for both parties (and one adopted by the 2000 FRCP R. 26 Amendments).

Pat chooses Opera Pat chooses Fight

Chris chooses Opera C=2, P=1 C=0, P=0

Chris chooses Fight C=0, P=0 C=1, P=2

The Battle of the sexes has multiple equilibria. There are two pure strategy (i.e., non-probabilistic) equilibria. One in which the couple goes to the fights, and one in which to couple goes to the opera.

There is also a mixed strategy equilibrium:

Chris goes to the fights 1/3 of the time. Pat goes to the fights 2/3 of the time.


Coordination Game Battle of the Sexes

In order to have a mixed strategy equilibrium, each party must be indifferent between choosing the fights and opera. For Pat, the payoff from choosing opera equals

(1- Prob. Chris chooses Fights)*1 + (Prob Chris Chooses Fights)*0,

while the payoff from choosing the Fights equals

(1-Prob. Chris chooses Fights)*0 + (Prob Chris chooses Fights)*2.

Setting the two equal yields (1-p) = 2p. Solving for p yields p* = 1/3.

That is, the equilibrium probability that Chris chooses to go to the fights must equal 1/3.

A similar calculation yields that the equilibrium probability that Pat chooses to go to the fights is 2/3.

The probability that they both go to the fights is 1/3*2/3 = 2/9. The probability they both go to the opera is also 2/9. Thus the probability they do not meet is 1-4/9 = 5/9--over half the time!


Mixed Strategies and the Coordination Game

Here, the off diagonals are both pure strategy equilibria.

There is also a mixed strategy where both Pat and Chris choose to swerve 90% of the time.


Chicken The Un-coordination Game

No pure strategy equilibrium

Mixed strategy equilibrium with both choosing Opera with probability 2/3.


Stalker Game

Market prices are an objective measure of the marginal value of the products or services exchanged in a particular market.

Subjective values of marginal buyers and sellers are close to each other and determine the market price.

Supply

Demand

Quantity

Price

Value of Homes in Excess of the Market Price

Non-Selling

Subjective Value of Current Home in Excess of Market PriceP*

Q*

Market Prices and Subjective Value


Markets and revealed preference - reveals that value, including subjective value of buyer (seller), is above (below) market price.

Market prices do not reveal much about the inframarginal values of goods and services

transaction.

Supply

Demand

Quantity

Price

Value of Homes in Excess of the Market Price

Non-Selling

Subjective Value of Current Home in Excess of Market PriceP*

Q*




use market value because of difficulties in accurately valuing idiosyncratic subjective value.

Property Insurance and moral hazard - does not cover subjective value because of concerns that such coverage would encourage insured parties to overstate losses.

Supply

Demand

Quantity

Price

Subjective Value destroyed by taking with compensation at market price.P*

Q*




Ms. Kelo

no slide title · a modified gilson and mnookin payoff matrix would look like the following: the...

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