Although institutions rooted in the folk theorem can support self-enforcing exchange in a wide variety of contexts, their potential to create cooperation is not limitless. In particular, the folk theorem may break down when some agents are physically stronger than others. I demonstrate this in...

Frey [2001] and others propose subjecting governments to competition within their jurisdiction, but classical liberals argue that having competing law enforcers cannot work. This article describes a hybrid system that relies on markets but has one law enforcement agency per region, with profit...

Independent rent extraction by competing public officials produces a level of bribery that is too high both from the viewpoint of corrupt administrations and from the viewpoint of social welfare. Nevertheless, governments in many developing countries do not curb the harmful lack of coordination...

I analyze the postelectoral coalition formation process in a two-dimensional political environment. The two dimensions are the degree of a proportional tax rate and the degree of a group-specific public good. Parties are office-motivated and care instrumentally about policy. I analyze when...

Contemporary economic liberalism comes in two forms: a substantive version, which defines the scope and extent of economic policy, and a procedural version, which draws on citizens' preferences. Whereas the recent reconception of economic liberalism based on social-contract theory considers the...

This paper extends the analysis of the structure of judicial hierarchies to environments in which litigants may have asymmetric information about the merits of the case. We identify equilibria in which the error rate is zero. In each equilibrium, at least one of the inferior courts does not...

Our model presents an underexamined element of policy reform and institutional quality, showing how the characteristics of the political system may render citizens unable to properly reward politicians who implement new projects, thus favouring politicians who secure the status quo, albeit...

This paper analyzes a general-equilibrium model in which each person can choose to be either a producer or a predator. This model shows how predation breaks the link between the interpersonal distribution of productive resources and the inter-personal distribution of consumption. Specifically,...

The doctrine of efficient breach is based on the belief that the risk of postcontractual bargaining failure under property rules is greater than the risk of the courts' miscalculation of damages under liability rules. The article presents the findings of two experiments that challenge this...

Two theorems are presented that show the following: Assume that preferences are influenced by past consumption. If and only if preferences are adaptive, it is the case that all improvement sequences are acyclic and thus can be a basis for doing welfare economics. It is further argued that...