We propose an activity-generating theory of regulation. When courts make errors, tort litigation becomes unpredictable and as such imposes risk on firms, thereby discouraging entry, innovation, and other socially desirable activity. When social returns to innovation are higher than private...

In recent decades, the involvement of economists as consultants and expert witnesses in civil tort actions has grown rapidly. In this article, the authors discuss the reasons for this phenomenon and the extent to conflicts of interest to arise in the practice of what is frequently called...

A basic principle of law is that damages paid by a liable party should equal the harm caused by that party. However, this principle is not correct when account is taken of litigation costs, because they too are part of the social costs associated with an injury. In this article we examine the...

A basic principle of law is that damages paid by a liable party should equal the harm caused by that party. However, this principle is not correct when account is taken of litigation costs, because they too are part of the social costs associated with an injury. In this article we examine the...

We explore the sensitivity of the clinical decisions of physicians to the standards of care expected of them under the law, drawing on the abandonment by states over time of rules holding physicians to standards determined by local customs and the contemporaneous adoption of national-standard...

Previous literature on frivolous lawsuits has focused on litigation costs and the optimal settlement-trial decision of defendants, but has not examined how they affect deterrence. This paper considers whether there are circumstances under which frivolous suits might actually increase deterrence,...

Exxon Shipping Co. v. Baker acknowledged that empirical studies undercut criticism of punitive damages. Paradoxically, the Court simultaneously expressed concern about jury predictability based on a high and variable punitive-compensatory ratio published in an article by the present authors. The...

Attorney advertising routinely targets tort victims. This paper reviews legal services advertising restrictions in the United States and abroad. A theoretical model is developed which incorporates advertising intensity, litigation costs, and an endogenous number of lawsuits. Since advertising...

How do medical errors affect physician behavior? Despite the importance of this question empirical evidence about it remains limited. This paper studies the impact of obstetricians’ medical errors that resulted in malpractice litigation on their subsequent choice of whether to perform a...

We claim that Posner's nuisance rule maintains the efficiency feature even under severe informational asymmetry. This paper, as a critical assessment of an overly complicated order-reporting mechanism by Kim [2002], argues that Posner's original value-reporting mechanism alone is enough to...