Many law and economics models concern static efficiency and redistribution. The standard analysis of dynamic industries requires lawmakers to balance faster innovation against lower consumer prices. Sustained growth dominates these effects, so law and growth economics should focus on maximizing...

Sustained growth occurs in developing nations through improvements in markets and organizations. These entrepreneurial innovation resembles a biological mutation that is unpredictable before it occurs and understandable afterwards. It is unpredictable because it begins with the innovator...

Economics, which has greatly advanced deterrence theory, has made no contribution to understanding how law changes peoples’ values. I combine economics and psychology to offer the framework for such a theory. Rational self-development involves treating yourself as the means to achieve...

In standard models of contracts, efficient incentives require the promisor to pay damages for non-performance and the promisee to receive no damages. To give efficient incentives to both parties, we propose a novel contract requiring the promisor to pay damages for nonperformance to a third...

Agency problems beset firms and prompt opportunistic behavior by employees. Opportunistic behavior redistributes value, whereas cooperative behavior creates value. Firm-specific fairness norms typically promote the firm’s efficiency by increasing cooperation and decreasing opportunism....

Money cannot compensate for some losses, as when parents suffer the death of a child. For incompensable losses, courts should develop theory and practice of damages from the way reasonable people respond to the risk of incompensable losses. Specifically, courts should apply the Hand Rule to find...

Like constructing a building, performance on many contracts occurs in phases. As time passes, the promisor sinks more costs into performance and less expenditure remains. For phased performance, we show that optimal liability for the breaching party decreases as the remaining costs of completing...

In the private sector, many small firms imply shallow hierarchy and narrow product lines. Similarly, in the public sector many small governments imply shallow hierarchy and narrow governments. This paper explains when replacing broad, deep governments with shallow, narrow governments increases...

To redistribute income, charitable giving must supplement progressibe taxes. One person can sometimes observe another's donations to specific charities, but one person cannot observe another's total donations to all charities. Consequently, people do not have enough information to know whether...

In trials witnesses often gain by slanting their testimony. The law tries to elicit the truth from witnesses by cross-examination under threat of criminal prosecution for perjury. As a truth-revealing mechanism, perjury law is crude and ineffective. We develop the mathematical form of a perfect...