We study alternative breach remedies in the presence of specific investments that generate a direct benefit to the investor's trading partner (referred to as "cooperative investments."). We find that (i) expectation damages perform very poorly, inducing no cooperative investment; (ii) privately...

In this article, I study how the presence of a revolving door and potential collusion between a regulator and a regulated firm affect the regulator's performance incentives. Contrary to the conventional wisdom, these seemingly undesirable features of the regulatory system may serve the interests...

We examine the value of incorporating regulatory information into the court liability decision and making it publicly available when the causality of harm is uncertain. Public access to regulatory information, coupled with its use in a liability decision, not only improves the accuracy of court...

This article studies design competition in government procurements by developing a model of two-dimensional auctions, where firms bid on both price and quality, and bids are evaluated by a scoring rule designed by a buyer. Three auction schemes -- first score, second score, and second preferred...

A "decoupled" liability system is one in which the award to the plaintiff differs from the payment by the defendant. The optimal system of decoupling makes the defendant's payment as high as possible. Such a policy allows the award to the plaintiff to be lowered, thereby reducing the plaintiff's...

We study competitive procurement administered by a corrupt agent who is willing to manipulate his evaluation of contract proposals in exchange for bribes. With complete information and no corruption, the efficient firm will win the contract for sure. If the agent is corrupt and has large...

A liquidity-constrained entrepreneur raises capital to finance a business activity that may harm bystanders. The entrepreneur raises senior (secured) debt to shield assets from the tort victims in bankruptcy. For a fixed level of borrowing, senior debt creates better incentives for precaution...