This paper develops and applies a new semi-parametric correction for sample-selection in the
context of a multi-market Roy model of mobility and earnings. Instead of workers choosing occupations
as in Roy's paper, this paper formulates a model where individuals choose which of the 50 states in the
U.S. (plus the District of Columbia) to live and work in. The new econometric methodology combines
Lee's (1982) parametric "maximum order statistic" approach to multi-choice selection models with Ahn
and Powell’s (1993) more recent work on "single-index" models. The resulting correction requires no
assumptions on the joint distribution of the error terms in the outcome and multiple selection equations
and can easily be adapted to a variety of other polychotomous choice problems. The empirical work,
which uses Census data for I980 and 1990, confirms the role of comparative advantage in mobility
decisions. The results suggest that self-selection of higher educated people to states with higher returns
to education generally leads to downward biases in the returns to education in state-specific labor
markets. I also find that state-to-state migration flows respond strongly to differences in the return to
education and amenities across states.

In this paper we study the complete evolution of a final-offer arbitration system used in New
Jersey with data we have systematically collected over the 18-year life of the program. Covering
the wages of police officers and firefighters, this system provides virtually a laboratory setting for
the study of the evolution of strategic interaction. Our empirical analysis provides convincing
evidence that, left alone, the parties do not construct and present their offers as successfully as
when they retain expert agents to assist them. In principle, expert agents may be helpful to the
parties for two different reasons: (a) they may move the arbitrator to favor their position
independently of the facts, or (b) they may help eliminate inefficiencies in the conduct of strategic
behavior. In this paper we construct a model where the agent may influence outcomes
independent of the facts, but where the agent may also improve the outcomes of the process by
moderating any self-serving biases or over-confidence that may have led to impasse in the first
instance. Our data indicate that expert agents may well have had an important role in moderating
self-serving biases early in the history of the system, but that the parties have slowly evolved to a
non-cooperative equilibrium where the use of third-party agents has become nearly universal and
where agents are used primarily to move the fact finder’s decisions.

Do the parties in a typical dispute face incentives similar to those in the classic prisoner’s dilemma game? In this paper, we explore whether the costs and benefits of legal representation are such that each party seeks legal representation in the hope of exploiting the other party, while knowing full well that failing to do so will open up the possibility of being exploited. The paper first shows how it is possible to test for the presence of such an incentive structure in a typical dispute resolution system. It then reports estimates of the incentives for the parties to obtain legal representation in wage disputes that were settled by final-offer arbitration in New Jersey. The paper also reports briefly on similar studies of data from discharge grievances, courtannexed
disputes in Pittsburgh, and child custody disputes in California. In each case, the data provide evidence that the parties face strong individual incentives to obtain legal representation which makes the parties jointly worse off. Using our New Jersey data, we find that expert agents may well have played a productive role in moderating the biases of their clients, but only early on in the history of the system. Over time, the parties slowly evolved to a non cooperative equilibrium where the use of lawyers becomes nearly universal, despite the fact that agreeing not to hire lawyers is cheaper and does not appear to alter arbitration outcomes.