Shavell (1980) established that tort regimes fail to incentivize optimal activity levels. The bearer of residual loss adopts a socially optimal activity level; however, the nonbearer of residual loss will adopt an excessive level. We explore alternative liability rules, which distribute the cost...

There is extensive literature on whether courts or legislators produce efficient rules, but which of them produces rules efficiently? The law is subject touncertainty ex ante; uncertainty makes the outcomes of trials difficult to predict and deters parties from settling disputes out of court. In...

This study shows that the effects of judgment proofness on precaution depend on whether the injurer can reduce the probability of the accident, the magnitude of the harm, or both. Different legal solutions to the problem are examined: punitive damages, average compensation, undercompensation,...

This paper develops a general model of anticommons fragmentation in property. Using several related examples, we consider the equilibria obtained under different scenarios. The various illustrations are later utilized to develop a model of fragmented property. The model reveals that the private...

Many legal systems foster metarules of reciprocity to facilitate cooperative outcomes. This paper considers the role of reciprocity rules in various strategic environments. We start by considering the effect of reciprocity constraints in a classic prisoners' dilemma with two symmetric parties...