Incentive Effects of Basel II
The PhD project examines the incentive effects of the new equity regulation for banks (Basel II). Under Basel I, banks were supposed to cushion the default risk with a equity ratio which did not take into account the different default risks of the respective customers. Basel II forces the banks to apply different equity ratios, depending on the risk. This may lead to an adverse selection ef-fect and, thereby, to capital market failure. Moreover, Basel II may alter the incentives of banks to truthfully reveal their internal rating results.
Kirstein, R. (2002): The New Basle Accord, Internal Ratings, and the Incentives of Banks; in: International Review of Law and Economics 21 (4), 393-412.
Condorcet-Jury-Theorem with two Error Probabilities
Georg v. Wangenheim, Univ. Kassel
According to the Condorcet-Jury-Theorem, in binary decision situations a group decision is better than a decision each homogenous group member if the individual erroro probability is greater than 0.5. It is assumed that the probabilities first- and second-type errors are identical. Relaxing these assumption leads to different results: Combinations of error probabilities exist in which one is smaller than 0.5, but the group decision is better.
Incentives of Dictators
Stefan Voigt, Univ. Marburg
The paper uses game-theoretic tools to highlight the incentives of dictators to comply with social contracts. Dictators cannot extort their subordinates in an unlimited way, as this may increase the probability of a successful revolution. The model yields testable hypotheses on the development of constitutions in different political systems. It contributes to "Positive Constitutional Economics".
Kirstein, R./Voigt, S. (2006): The Violent and the Weak. When Dictators Care about Social Contracts; in: American Journal of Economics and Sociology 65(4), 863-889.
Bad-Debt-Loss Insurance in Settlement and Trial
Hans Gerhard, Attorney, Saarbrücken
Bad-Debt-Loss insurance may exert a different impact on the outcome of settlement bargaining, depending on whether it covers claims from trial or from the outcome of the settlement. A trial insurance increases the plaintiff's threat point and, thereby, the settlement outcome. A settlement insurance increases the value of the settlement for the plaintiff and, therefore, weakens his bargaining position.
Kirstein, R./Gerhard, H. (2005): The 'Rainmaker's Dilemma': Bad Debt Loss Insurance in Settlement and Litigation
Mandatory Warranties for Used Cars
The study examines - both from a theoretical and an empirical angle - the impact of a new EU legislation that has introduced a mandatory warranty for used cars.
Kirstein, R./H.-B. Schäfer (2007): Europäischer Verbraucherschutz ohne Grenzen? Eine informationsökonomische Analyse des harmonisierten EU-Gewährleistungsrechts. In: 10. Travemünder Symposium zur Ökonomischen Analyse des Rechts, Travemünde, March 2006 (eds. H.-B. Schäfer und Th. Eger), Mohr/Siebeck, Tübingen.