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Leniency Designs: An Operator's Manual

Author

Listed:
  • Paul Goldsmith-Pinkham
  • Peter Hull
  • Michal Kolesár

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.

Suggested Citation

  • Paul Goldsmith-Pinkham & Peter Hull & Michal Kolesár, 2026. "Leniency Designs: An Operator's Manual," Journal of Economic Perspectives, American Economic Association, vol. 40(3), pages 213-240, Summer.
    • Handle: RePEc:aea:jecper:v:40:y:2026:i:3:p:213-40
    DOI: 10.1257/jep.20251480
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    More about this item

    JEL classification:

    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • C26 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Instrumental Variables (IV) Estimation
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital

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