In a full-information, zero transactions costs world, the degree of protection afforded to an entitlement does not affect the likelihood of efficient trade. In reality, imperfect information is often inevitable. Specifically, a party will usually have incomplete information about fairness norms...

This paper explores potential endowment effects of contractual default rules. For this purpose, we analyze the Hadley liability default clause in a model of bilateral bargaining of lotteries against safe options. The liability default clause determines the right for the safe payoff option. We...

Sanctions are often so weak that a money maximizing individual would not be deterred. In this paper I show that they may nonetheless serve a forward looking purpose if sufficiently many individuals are averse against advantageous inequity. Using the Fehr/Schmidt model (QJE 1999) I define three...

Under common law, the standard remedy for breach of contract is expectation damages. Under continental law, the standard is specific performance. The common law solution is ex post efficient. But is it also ex ante efficient? We use experimental methods to test whether knowing that...

Public goods are dealt with in two literatures that neglect each other. Mechanism design advises a social planner that expects individuals to misrepresent their valuations. Experiments study the provision of the good when preferences might be non-standard. We introduce the problem of the...

On the doctrinal surface, there is a deep divide between common and continental law when it comes to the origin of contractual obligations. Under continental law, in principle a unilateral promise suffices. Common law by contrast requires consideration. When it comes to deciding cases, the...

U.S. intellectual property law is firmly rooted in utilitarian principles. Copyright law is viewed as a means to give proper monetary incentives to authors for their creative effort. Many European copyright systems pursue additional goals: Authors have the right to be named as author, to control...

In the US or in the UK, the presence of institutional investors in real estate markets is an old phenomenon. Specifically, Real Estate Investment Trusts are an old industry. Due to a difference in tax law, the market share of REITs in Germany has been minimal until very recently. Now the...

The Coase theorem posits: If [1] property rights are perfect, [2] contracts are enforceable, [3] preferences are common knowledge, and [4] transaction costs are zero, then the initial allocation of property rights only matters for distribution, not for efficiency. In this paper we claim that...

Policymakers all over the world claim: no innovation without protection. For more than a century, critics have objected that the case for intellectual property is far from clear. This paper uses a game theoretic model to organise the debate. It is possible to model innovation as a prisoner's...