This dissertation comprises of three essays in law and economics. The first chapter, a joint work with my advisor, Marjorie McElroy, examines the longly debated effect of the liberalized divorce laws in the United States on the divorce rates during 1956-1989. In our paper, we distinguish between the change in the ground for divorce, which includes grounds such as irreconcilable differences or living separate and apart for a considerably shorter period, and the change in the property rights to divorce from a mutual consent to a unilateral divorce. Using our independently researched divorce laws, we perform a spline linear regression and conclude that divorce grounds such as irreconcilable differences or living separate and apart for less than 2 years are likely to increase the divorce rates. A switch from a mutual consent to a unilateral divorce, however, does not have a statistically different effect on the divorce rates.

Chapter two and three are two related papers on the theoretical and empirical analysis of bribery. In chapter two, I develop a generalized Nash bargaining model of bribery that simultaneously determines the incidence of bribery and the level of bribe. The paper discusses a number of advantages of a cooperative game theoretic modeling of bribery and emphasizes on the role of risk aversion of agents on the effectiveness of various anti-bribery measures. A number of testable implications and contributions to the literature include the effect of the degree of risk aversion, the probability of detection, the level of penalty, and public compensation reform on bribery.

In chapter three, I use firm level data on bribery from The Business Environment and Enterprise Performance Survey (BEEPS) in 2005 to analyze the empirical determinants of the incidence of bribery and the level of bribe. The estimation methodology follows a standard discrete choice estimation for the incidence of bribery and a least square regression for the level of bribe. I also perform two robustness analyses: an endogeneity correction using an instrumental variable method for variables such as profit and a survey response bias correction for bribe-giving firms that may not reveal the truth in the survey. The estimation produces statistically significant estimates whose signs are consistent with the conjecture. In addition, I found that an increase in the judicial quality as perceived by firms significantly reduces the bribery incidence as well as the amount of bribe in the executive branch. The findings suggest that bribery is more rampant among emerging business entrepreneurs and that an effective judiciary tends to provide a good check and balance that deters the corruption within the executive branch in the country.