The economic analysis of tort law is extended to multi-party accidents with unobservable actions. Due to the requirement of no punitive damages, the problem resembles a team production problem. It is shown that asymmetry in the agents' impact on the stochastic damage function can be exploited to...

This paper analyzes optimal bank capital requirements when regulation can be differentiated according to banks’ heterogeneous risk-assessment capabilities. The new Basel II Accord provides the opportunity to do by introducing distinct regulatory systems for banks authorized to apply internal...

The Basel Committee plans to differentiate risk-adjusted capital requirements between banks regulated under the internal ratings based (IRB) approach and banks under the standard approach. We investigate the consequences for the lending capacity and the failure risk of banks in a model with...

We propose a simple liability rule when several agents are jointly responsible for monitoring a risky economic activity or certifying its security. Examples are safety controls for drugs or technical systems, environmental liability, or air safety accidents. The agents have private knowledge of...

We analyze the impact of liability risks for malpractice on the optimal reimbursement schemes for hospitals. In our model, the hospital decides upon two unobservable efforts, a cost reduction effort and a quality improvement effort. We assume that the total effort is positive even without...

We investigate optimal capital requirements in a model in which banks decide on their investment in credit scoring systems. Our main result is that regulators should encourage sophisticated banks to keep their asset portfolios safe, while assets with high systematic risk should be concentrated...

Recently, the European Commission has issued the Directive 2004/35/CE on environmental liability with regard to the prevention and remedying of environmental liability. The Directive extends liability that usually refers to personal injuries and private property to harm where private property...

Journalists sued for defamation may refuse to reveal their anonymous sources. To escape liability under the traditional English rule, they then need to show proof that the news is correct. By contrast, many US states have switched the burden of proof such that plaintiffs must first present...

We analyze the German Capital Markets Model Case Law (KapMuG") enacted to reduce transaction costs in securities mass litigation. The KapMuG is often seen as a European role model trying to enhance investor rights without running the risk of frivolous claims known from US class actions. We show...

We analyze whether corporate leniency programs should grant full immunity to the first self-reporting firm regardless of the amount of evidence provided. We distinguish between two firms, one of them providing high and one only low evidence. We show that awarding full amnesty also to the low...