We focus in this paper on the effects of court errors on the optimal sharing of liability between firms and financiers, as an environmental policy instrument. Using a structural model of the interactions between firms, financial institutions, governments and courts we show, through numerical...

This paper analyzes the output, abatement, and investment decisions made by a monopolistic polluter under environmental liability law. The model applied considers both integrated and end-of-pipe abatement technologies. We find that in the case of fixed technology, in many instances negligence...

When a region successfully attracts a large firm by offering tax concessions, outright subsidies etc., the firm often commits itself to performance targets in terms of investment or employment. This paper interprets these contractually fixed targets as a consequence of incomplete information. It...

Work and trade relationships are often governed by relational contracts, in which incentives for cooperative action today stem from the prospective future benefits of the relationship. In this paper, we study how reductions in clarity about the financial consequences of actions, induced by...

We shed light on the function, properties and optimal size of austerity using the standard sovereign debt model augmented to include incomplete information about credit risk. Austerity is defined as the shortfall of consumption from the level desired by a country and supported by its repayment...

We assume that students can acquire a wage premium, thanks to studies, and form a rational expectation of their future earnings, which depends on personal ability. Students receive a private, noisy signal of their ability, and universities can condition admission decisions on the results of...

We experimentally study decentralized one-to-one matching markets with transfers. We vary the information available to participants, complete or incomplete, and the surplus structure, supermodular or submodular. Several insights emerge. First, while markets often culminate in efficient...

We propose a forensic approach to investigate the politico-economic forces that influence narrow vote outcomes in legislative assemblies. Applying nonparametric estimation techniques to a data set covering all roll call votes between 1990 and 2014, we can identify the existence of precise...

Criminal law enforcement depends on the actions of public agents such as police officers, but the resulting agency problems have been neglected in the law and economics literature (especially outside the specific context of corruption). We develop an agency model of police behavior that...