Most Popular Books by Steven D Levitt

Although the theoretical literature on corruption is well developed, empirical work in this area has lagged because it has proven difficult to isolate corrupt behavior in the data. In this paper, we look for evidence of corruption in an unlikely place: the highest echelons of Japanese sumo wrestling. This paper provides strong statistical evidence documenting match rigging in sumo wrestling. A non-linearity in the incentive structure of promotion leads to gains from trade between wrestlers on the margin for achieving a winning record and their opponents. We show that wrestlers win a disproportionate share of the matches when they are on the margin. Increased effort can not explain the findings. Winning on the bubble is more frequent when the two competitors have met often in the past. Success on the bubble tends to rise over the course of a wrestler''s career, but declines in his last year, consistent with the game theoretic predictions. Wrestlers who are victorious when on the bubble lose more frequently than would be expected the next time they meet that opponent, suggesting that part of the payment for throwing a match is future payment in kind. Systematic differences across wrestling stables suggest that the stables play a role in facilitating the corruption. In times of increased media scrutiny, the match rigging disappears.

Profit maximizing behavior on the part of firms is a fundamental, but rarely tested, assumption of economics. In this paper, I analyze the decisions made by an MIT trained economist running a company that delivers bagels and donuts. The simplicity and transparency of the business (e.g. marginal cost is easily observed) allow for direct tests of profit maximization in the quantities delivered each day and the prices that are charged. Using thirteen years of data representing more than 80,000 deliveries, I find that the company is extremely adept at determining how many bagels and donuts to deliver to a particular customer on a given day. In stark contrast, the company appears to price on the inelastic portion of the demand curve for the entire period, thereby foregoing a substantial share of available profits. I argue that these results generalize well beyond this particular case study: firms are likely to be close to the efficient frontier on dimensions for which there is frequent and informative feedback regarding profits, but absent that feedback, systematic deviations from profit maximization are more likely.

In most settings, it is difficult to measure discrimination, and even more challenging to distinguish between competing theories of discrimination (taste-based versus information-based). Using contestant voting behavior on the television game show Weakest Link, one can in principle empirically address both of these questions. On the show, contestants answer questions and vote off other players, competing for a winner-take-all prize. In early rounds, strategic incentives encourage voting for the weakest competitors. In later rounds, the incentives reverse, and the strongest competitors become the logical target. Controlling for other observable characteristics including the number of correct answers thus far, both theories of discrimination predict that in early rounds, excess votes will be made against groups targeted for discrimination. In later rounds, however, taste-based models predict continued excess votes, whereas statistical discrimination predicts fewer votes against the target group. Empirically, I find some evidence of information-based discrimination towards Hispanics (i.e., other players perceive them as having low ability) and taste-based discrimination against older players (i.e., other players treat them with animus). There is little in the data to suggest discrimination against women and Blacks