We consider a dynamic model featuring two firms that test a regulator’s enforcement propensity through their misconduct and a regulator that disciplines them to build a reputation for strict enforcement. We show that when the regulator has full discretion over the enforcement criterion, peer...

Does political polarization lead to dysfunctional behavior? To study this question, we investigate the attitudes of supporters of Donald Trump and of Hillary Clinton towards each other and how these attitudes affect spiteful behavior. We find that both Trump and Clinton supporters display less...

We report the results of laboratory experiments on rent-seeking contests with endogenous participation. Theory predicts that (a) contest entry and rent-seeking expenditures increase with the size of the prize; and (b) earnings are equalized between the contest and the outside option. While the...