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A Fundamental Enforcement Cost Advantage of the Negligence Rule Over Regulation

Shavell, Steven - 2012

Regulation and the negligence rule are both designed to obtain compliance with desired standards of behavior, but they … differ in a primary respect: compliance with regulation is ordinarily assessed independently of the occurrence of harm … use of the negligence rule is triggered by harm, the rule enjoys an intrinsic enforcement cost advantage over regulation …

Persistent link: https://www.econbiz.de/10013100136

Punishment and Cooperation in Stochastic Social Dilemmas

Xiao, Erte; Kunreuther, Howard - 2021

Previous findings on punishment have focused on environments in which the outcomes are known with certainty. In this … paper, we conduct experiments to investigate how punishment affects cooperation in a two-person stochastic prisoner … specified probabilistically under a transparent information condition. In particular, we study two types of punishment …

Persistent link: https://www.econbiz.de/10013224395

The Informativeness Principle Under Limited Liability

Chaigneau, Pierre - 2014

This paper shows that the informativeness principle does not automatically extend to settings with limited liability. Even if a signal is informative about effort, it may have no value for contracting. An agent with limited liability is paid zero for certain output realizations. Thus, even if...

Persistent link: https://www.econbiz.de/10013047777

Doubling Down on Debt : Limited Liability as a Financial Friction

Perla, Jesse; Pflueger, Carolin E.; Szkup, Michael - 2022

We investigate how a combination of limited liability and preexisting debt distort firms’ investment and equity payout decisions. We show that equity holders have incentives to “double-sell” cash flows in default, leading to overinvestment, provided that the firm has preexisting debt and...

Persistent link: https://www.econbiz.de/10013291781

Sulfur Dioxide Compliance of a Regulated Utility

Fullerton, Don; McDermott, Shaun P.; Caulkins, Jonathan P. - 2021

Electric utilities can reduce sulfur dioxide emissions through a variety of strategies such as adding scrubbers, switching to low- sulfur coal, or shifting output between generating plants with different emissions. The cost of achieving a given emission target can be minimized using a market for...

Persistent link: https://www.econbiz.de/10013246062

Tobacco Regulation Through Litigation : The Master Settlement Agreement

Viscusi, W. Kip - 2012

The 1998 Master Settlement Agreement resolved the unprecedented litigation in which the states sought to recoup the cigarette-related Medicaid costs. The litigation was settled through a combination of negotiated regulatory requirements and financial payments of about $250 billion over 25 years....

Persistent link: https://www.econbiz.de/10013116702

The Political Economy of Weak Treaties

Battaglini, Marco - 2016

puzzle in standard economic models. To study this phenomenon, we propose a positive theory of IEAs in which the political … (might not be implemented in full). The theory also provides a new perspective for understanding investments in green …

Persistent link: https://www.econbiz.de/10012976975

How Common are Electoral Cycles in Criminal Sentencing?

Dippel, Christian - 2019

Existing research on electoral sentencing cycles shows that elected judges levy longer sentences when they are up for re-election. Using newly collected sentencing data including a number of states not previously studied, we find that elected judges in several states do not appear to change...

Persistent link: https://www.econbiz.de/10012889062

The Optimal Use of Fines and Imprisonment

Polinsky, Alan Mitchell; Shavell, Steven - 2021

This paper examines the use of fines and imprisonment to deter individuals from engaging in harmful activities. These sanctions are analyzed separately as well as together, first for identical risk-neutral individuals and then for two groups of risk-neutral individuals who differ by wealth. When...

Persistent link: https://www.econbiz.de/10013218978

Economic Analysis of the General Structure of the Law

Shavell, Steven - 2021

This paper contains a chapter on the general structure of the law from a forthcoming book, Foundations of Economic Analysis of Law (Harvard University Press, 2003). In this chapter, I consider basic features of the legal system, including whether the law directly constrains behavior or channels...

Persistent link: https://www.econbiz.de/10013220934