Multiple empirical studies find that juries/courts take account of potential harm in the determination of punitive damages. The received view in economic theory, however, is that punitive damages should not depend on potential harm. The purpose of this note is to provide an efficiency rationale...

It has been generally accepted for unilateral-care models that care incentives are not affected by the use of either accurate damages or average damages if injurers lack knowledge of the precise damage level they might cause. This paper shows that in bilateral-care models with heterogeneous...

It has been generally accepted for unilateral-care models that care incentives are not affected by the use of either accurate damages or average damages if injurers lack knowledge of the precise damage level they might cause. This paper shows that in bilateral-care models with heterogeneous...

We consider a monopolistic firm producing a good while polluting. This firm can adopt a cleaner technology within a finite time by incurring an investment cost decreasing exponentially with the adoption date. The firm is induced to adopt the cleaner technology at the socially optimal date by an...

Although traffic safety belongs to the quite intensively regulated sectors, there has been little discussion about the adequacy of the arguments underlying these regulations. We argue that passive and active car safety systems might cause positive externalities for other traffic participants and...

Use of public humiliation as a deterrent to crime has a long history as does the debate over its effectiveness. A recent rule change in college football presents a natural experiment to test the effectiveness of so-called shaming penalties. In 2004 the National Collegiate Athletic Association...

Limited liability may result in inefficient accident prevention, because a relevant portion of the expected harm is externalized on victims. This paper shows that under some restrictive conditions further limiting liability by means of a liability cap can improve caretaking.

Limited liability may result in inefficient accident prevention, because a relevant portion of the expected harm is externalized on victims. This paper shows that under some restrictive conditions further limiting liability by means of a liability cap can improve caretaking.

In criminal law, when a conflict is solved by plea bargaining, the negotiation is mainly made between the prosecutor and the lawyer. Adopting a complete information framework about his type (selfish or altruistic), this paper compares two lawyer payment systems: flat fees and hourly-wage fees....

Multiple economic experiments suggest that the moral context of consumption and/or production influences willingness-to-pay and willingness-to-accept. Precisely how this influence should be modeled from a theoretical perspective, however, remains understudied. The prevailing view is that moral...