Journal of Economic Perspectives
ISSN 0895-3309 (Print) | ISSN 1944-7965 (Online)
Leniency Designs: An Operator's Manual
Journal of Economic Perspectives
(pp. 213–40)
(Complimentary)
Abstract
We develop a step-by-step guide to leniency (a.k.a. judge or examiner instrument) designs, drawing on recent econometric literatures. The unbiased jackknife instrumental variables estimator (UJIVE) is purpose-built for leveraging exogenous leniency variation, avoiding subtle biases even in the presence of many decision-makers or controls. We show how UJIVE can also be used to assess key assumptions underlying leniency designs, including quasi-random assignment and average first-stage monotonicity, and to probe the external validity of treatment effect estimates. We further discuss statistical inference, arguing that non-clustered standard errors are often appropriate. A reanalysis of Farre-Mensa et al. (2020), using quasi-random examiner assignment to estimate the value of patents to startups, illustrates our checklist.Citation
Goldsmith-Pinkham, Paul, Peter Hull, and Michal Kolesár. 2026. "Leniency Designs: An Operator's Manual." Journal of Economic Perspectives 40 (3): 213–40. DOI: 10.1257/jep.20251480Additional Materials
JEL Classification
- C13 Estimation: General
- C21 Single Equation Models; Single Variables: Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions
- C26 Single Equation Models: Single Variables: Instrumental Variables (IV) Estimation
- D82 Asymmetric and Private Information; Mechanism Design
- O34 Intellectual Property and Intellectual Capital