Catholic Confession of Sins as Third-Party Moral Enforcement

Catholicism has built up a legalistic religion based on two pillars: salvation by works and 'auricular' confession of sins to a priest with judicial functions. Since the Reformation, many consider auricular confession inferior to less institutional and more individual conceptions of faith. This article analyzes how all these historical solutions trade off specialization advantages against exchange costs to produce moral enforcement. After showing the behavioral foundations of confession and the adaptiveness of its historical evolution, it tests hypotheses on its efficacy, exploitation and opportunity cost. Econometric evidence supports the efficacy but not the exploitative character of Catholic confession. It also explains its secular decline as a consequence of two factors. First, the rise in education, which makes moral self-enforcement less costly. Second, the productivity gap suffered by confession, given its necessarily interpersonal nature.

Specialization and rent-seeking in moral enforcement: The case of confession

Moral codes are produced and enforced by more or less specialized means and are subject to standard economic forces. This paper argues that the intermediary role played by the Catholic Church between God and Christians, a key difference from Protestantism, faces the standard trade-off of specialization benefits and agency costs. It applies this trade-off hypothesis to confession of sins to priests, an institution that epitomizes such intermediation, showing that this hypothesis fits cognitive, historical and econometric evidence better than a simpler rent-seeking story. In particular, Catholics who confess more often are observed to comply more with the moral code; however, no relationship is observed between mass attendance and moral compliance. The data also links the current decline in confession to the rise in education, which makes moral self-enforcement less costly, and to the productivity gap suffered by confession services, given its necessarily interpersonal nature.

The role of implicit contracts: Building public works in the 1840s in Portugal

Business History, Vol 50 No 2, p147-162

Dynamic Relational Contracts under Complete Information

This paper considers a long-term relationship between two agents who both undertake a costly action or investment that together produces a joint benefit. Agents have an opportunity to expropriate some of the joint benefit for their own use. Two cases are considered: (i) where agents are risk neutral and are subject to limited liability constraints and (ii) where agents are risk averse, have quasi-linear preferences in consumption and actions but where limited liability constraints do not bind. The question asked is how to structure the investments and division of the surplus over time so as to avoid expropriation. In the risk-neutral case, there may be an initial phase in which one agent overinvests and the other underinvests. However, both actions and surplus converge monotonically to a stationary state in which there is no overinvestment and surplus is at its maximum subject to the constraints. In the risk-averse case, there is no overinvestment. For this case, we establish that dynamics may or may not be monotonic depending on whether or not it is possible to sustain a first-best allocation. If the first-best allocation is not sustainable, then there is a trade-off between risk sharing and surplus maximization. In general, surplus will not be at its constrained maximum even in the long run.

Completing contracts ex post: How car manufacturers manage car dealers

This article illustrates how contracts are completed ex post in practice and, in so doing, indirectly suggests what the real function of contracts may be. Our evidence comes from the contracts between automobile manufacturers and their dealers in 23 dealership networks in Spain. Franchising dominates automobile distribution because of the need to decentralize pricing and control of service decisions. It motivates local managers to undertake these activities at minimum cost for the manufacturer. However, it creates incentive conflicts, both between manufacturers and dealers and among dealers themselves, concerning the level of sales and service provided. It also holds potential for expropriation of specific investments. Contracts deal with these conflicts by restricting dealers decision rights and granting manufacturers extensive completion, monitoring and enforcement powers. The main mechanism that may prevent abuse of these powers is the manufacturers reputational capital.

Contractual allocation of decision rights and incentives: The case of automobile distribution

We analyze empirically the allocation of rights and monetary incentives in automobile franchise contracts. These contracts substantially restrict the decision rights of dealers and grant manufacturers extensive contractual completion and enforcement powers, converting the manufacturers, de facto, in a sort of quasi-judiciary instance. Variation in the allocation of decision rights andincentive intensity is explained by the incidence of moral hazard in the relation. In particular, when the cost of dealer moral hazard is higher and the risk of manufactureropportunism is lower, manufacturers enjoy more discretion in determining the performance required from their dealers and in using mechanisms such as monitoring, termination and monetary incentives to ensure such performance is provided. We also explore the existence of interdependencies between the different elements of the system. and find some complementarities between completion and termination rights, and between monitoring rights and the intensity of incentives.

How competition controls team production: The case of fishing firms

Under team production, those who monitor individual productivity areusually the only ones compensated with a residual that varies withthe performance of the team. This pattern is efficient, as is shownby the prevalence of conventional firms, except for small teams andwhen specialized monitoring is ineffective. Profit sharing in repeatedteam production induces all team members to take disciplinary actionagainst underperformers through switching and separation decisions,however. Such action provides effective self-enforcemnt when themarkets for team members are competitive, even for large teams usingspecialized monitoring. The traditional share system of fishing firmsshows that for this competition to provide powerful enough incentivesthe costs of switching teams and measuring team productivity must bebellow. Risk allocation may constrain the organizational designdefined by the use of a share system. It does not account for itsexistence, however.

Audit quality: Attributes, private safeguards and the role of regulation

This article examines the private mechanisms used to safeguard quality in auditing, with a view to defining rules capable of facilitating the performance of market forces. An outline is given of a general theory of private quality assurance in auditing, based on the use of quasi-rents to self-enforce quality dimensions. Particular attention is paid to the role of fee income diversification as the key ingredient of private incentives for audit quality. The role of public regulation is then situated in the context defined by the presence of these safeguard mechanisms. This helps in defining the content of rules and the function of regulatory bodies in facilitating and strengthening the protective operation of the market. By making sense of the interaction between regulation, quality attributes and private safeguards, the analysis helps to evaluate the relative merits of different regulatory options.

The quasi-judicial role of large retailers: An efficiency hypothesis of their relation with suppliers

The paper explores an efficiency hypothesis regarding the contractual process between large retailers, such as Wal-Mart and Carrefour, and their suppliers. The empirical evidence presented supports the idea that large retailers play a quasi-judicial role, acting as "courts of first instance" in their relationships with suppliers. In this role, large retailers adjust the terms of trade to on-going changes and sanction performance failures, sometimes delaying payments. A potential abuse of their position is limited by the need for re-contracting and preserving their reputations. Suppliers renew their confidence in their retailers on a yearly basis, through writing new contracts. This renovation contradicts the alternative hypothesis that suppliers are expropriated by large retailers as a consequence of specific investments.

Efeitos de interrupções na cadeia de impostos sobre valor adicionado: evidências em dados de declaração de ICMS no estado de São Paulo

Utilizando dados do Estado de São Paulo sobre declarações de um imposto do tipo IVA, o ICMS, encontro indícios de que firmas cujos clientes possam utilizar crédito de ICMS para compensar seu próprio passivo tributário – como no funcionamento padrão de um IVA –apresentam menor nível de evasão fiscal que empresas cujos clientes, devido à inscrição em regime especial para pequenas empresas, não sejam autorizados pela legislação brasileira a utilizar o imposto incidente em suas compras de insumos como crédito, o que, em contexto geral, representa evidência da existência de self- enforcement em impostos sobre valor adicionado.

DWI detection and divided attention field sobriety testing: a self instructional training program for law enforcement officers. Final report.

Mode of access: Internet.

Use of policy, education, and enforcement to reduce binge drinking among university students: The NU Directions project

This paper describes a program, conducted over a 5-year period, that effectively reduced heavy drinking and alcohol-related harms among university students. The program was organized around strategies to change the environment in which binge drinking occurred and involved input and cooperation from officials and students of the university, representatives from the city and the neighborhood near the university, law enforcement, as well as public health and medical officials. In 1997, 62.5% of the university’s approximately 16,000 undergraduate student population reported binge drinking. This rate had dropped to 47% in 2003. Similar reductions were found in both self-reported primary and secondary harms related to alcohol consumption.

Attitudes, stress and use of force in selected areas of Texas law enforcement

This research aimed to explore the extent to which police use of force was related to attitudes towards violence, agency type, and racism. Previous studies have found a culture of honor in the psychology of violence in the Southern United States. Were similar attitudes measurable among Texas professional line officers? Are there predictors of use of force?^ A self reported anonymous survey was administered to Texas patrol officers in the cities of Austin and Houston, and the Counties of Harris and Travis. A total of seventy-four questionnaires were used in the statistical analyses. Scales were developed measuring use of force, attitudes towards violence, and feelings on racism. Their relationship was examined.^ A regression model shows a strong and significant relationship between the officers' attitudes towards violence and the self-reported use of force. Further, agency type, municipal versus sheriff, also predicts use of force. Attitudes regarding race or racism, as measured by this study, were not predictive of use of force. ^