We consider the design of a tax on greenhouse gas emissions for a developed country such as the United States. We consider three sets of issues: the optimal tax base, issues relating to the rate (including the use of the revenues and rate changes over time) and trade. We show that a well-designed carbon tax can capture about 80% of U.S. emissions by taxing fewer than 3,000 taxpayers and up to almost 90% with a modest additional cost. We recommend full or partial delegation of rate setting authority to an agency to ensure that rates reflect new information about the costs of carbon emmissions and of abatement. Adjustments should be made to the income tax to ensure that a carbon tax is revenue neutral and distributionally neutral. Finally, we propose an origin-based system for trades with countries that have an adequate carbon tax. We suggest a system that imposes presumptive border tax adjustments with the ability of an individual firm to prove that a different rate should apply. The presumptive tax could be based either on average emissions for production of the item by the exporting country or by the importing country.

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The Design of a Carbon Tax

In situations where people have an incentive to coordinate their behavior, law can provide a framework for understanding and predicting what others are likely to do. According to the focal point theory of expressive law, the law`s articulation of a behavior can sometimes create self-fulfilling expectations that it will occur. Existing theories of legal compliance emphasize the effect of sanctions or legitimacy; we argue that, in addition to sanctions and legitimacy, law can also influence compliance simply by making one outcome salient. We tested this claim in two experiments where sanctions and legitimacy were held constant. Experiment 1 demonstrated that a mandatory legal rule operating in a property dispute influenced compliance only when there is an element of coordination. Experiment 2 demonstrated that a default rule in a contract negotiation acted as a focal point for coordinating negotiation decisions. Both experiments confirm that legal rules can create a focal point around which people tend to coordinate in a mixed motive coordination game.

Coordinating in the Shadow of the Law: Two Contextualized Tests of the Focal Point Theory of Legal Compliance

Fearsome risks are those that stimulate strong emotional responses. Such risks, which usually involve high consequences, tend to have low probabilities, since life today is no longer nasty, brutish and short. In the face of a low-probability fearsome risk, people often exaggerate the benefits of preventive, risk-reducing, or ameliorative measures. In both personal life and politics, the result is damaging overreactions to risks. We offer evidence for the phenomenon of probability neglect, failing to distinguish between high and low-probability risks. Action bias is a likely result.

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Overreaction to Fearsome Risks

Mass media are often used to generate discussion for the purpose of conflict reduction A yearlong field experiment in eastern Democratic Republic of Congo (DRC) tested the impact of one such media program, a talk show designed to promote listener discussion about intergroup conflict and cooperation A stratified random half of all nonoverlapping broadcast regions in eastern DRC aired the talk show, which encouraged listeners to consider tolerant opinions and outgroup perspectives, and promoted extended intergroup contact using a related soap opera The other regions aired the soap opera only Compared to individuals exposed to the soap opera only, talk show listeners discussed more but were more intolerant, more mindful of grievances, and less likely to aid disliked community members These results point to some of the limits of discussion and suggest further research on ideas connecting theoretical recommendations for discussion and conflict reduction

Is It Better Not to Talk? Group Polarization, Extended Contact, and Perspective Taking in Eastern Democratic Republic of Congo

This Article uses comparative evidence to inform the ongoing debate about the selection and discipline of judges. In recent decades, many countries around the world have created judicial councils, institutions designed to maintain an appropriate balance between judicial independence and accountability. Our Article has two aims. First, we provide a theory of the formation of judicial councils and identify some of the dimensions along which they differ. Second, we test the extent to which different designs of judicial council affect judicial quality. We find that there is little relationship between councils and quality. We also offer a positive explanation for why judicial councils nevertheless remain attractive institutions.

https://papers.ssrn.com/sol3/Delivery.cfm/SSRN_ID1303847_code170891.pdf?abstractid=1303847.&mirid=1

Guarding the Guardians: Judicial Councils and Judicial Independence

Many groups make their decisions through some process of deliberation, usually with the belief that deliberation will improve judgments and predictions. But deliberating groups often fail, in the sense that they make judgments that are false or that fail to take advantage of the information that their members have. There are four such failures. (1) Sometimes the predeliberation errors of group members are amplified, not merely propagated, as a result of deliberation. (2) Groups may fall victim to cascade effects, as the judgments of initial speakers or actors are followed by their successors, who do not disclose what they know. Nondisclosure, on the part of those successors, may be a product of either informational or reputational cascades. (3) As a result of group polarization, groups often end up in a more extreme position in line with their predeliberation tendencies. Sometimes group polarization leads in desirable directions, but there is no assurance to this effect. (4) In deliberating groups, shared information often dominates or crowds out unshared information, ensuring that groups do not learn what their members know. All four errors can be explained by reference to informational signals, reputational pressure, or both. A disturbing result is that many deliberating groups do not improve on, and sometimes do worse than, the predeliberation judgments of their average or median member.

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Reed Hastie

Papers

Four Failures of Deliberating Groups