The theory of insurance is considered here when an insured individual may be able to sue another party for the losses that the insured suffered — and thus when an insured has a potential source of compensation in addition to insurance coverage. Insurance policies reflect this possibility...

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...