A century ago, captains of industry and their allies in government launched a social experiment in urban America: the abandonment of mass transit in favor of a new personal technology, the private automobile. Decades of investment in this shift have created a car-centric landscape with...

We analyze liability rules in a setting where injurers are potentially insolvent and where negligence standards may deviate from the socially optimal level. We show that proportional liability, which sets the measure of damages equal to the harm multiplied by the probability that it was caused...

Despite the advances in New Institutional Economics about the economic consequences of institutions and legal rules, up to now we have only limited knowledge about the mechanisms of the evolution of law. By combining the main ideas of Evolutionary Economics and New Institutional Economics this...

Attorneys elected to the US House of Representatives and to US state legislatures are systematically less likely to vote in favor of tort reforms that restrict tort litigation, but more likely to support bills that extend tort law. This finding is based on the analysis of 54 votes at the federal...

Settlements are often considered to be welfare-enhancing because they save time and litigation costs. In the presence of court error, however, this conclusion may be wrong. Court decisions create positive externalities for future litigants which will not occur if a dispute is settled out of...

In a world with risk-neutral agents, liability rules will only induce efficient behaviour if these rules impose the full (marginal) costs of an action on the parties. However, institutional restrictions or bilateral activity choices can prevent the full internalisation of costs. A mechanism is...

This paper deals with legal damages if losses of chances are at stake. In response to disparate ad hoc rules that have emerged from legal practice in Europe, the present paper proposes a unifying principle to handle such cases. Quite generally, the purpose of a damages award is to compensate the...

The legal notion of damages requires to compare the actual value of the creditor's assets with the hypothetical value that would have prevailed if the debtor had met his obligation. Moreover, values and causation may be uncertain. If nature's contribution is modelled as a random move then the...

What role does defensive conduct play in a utilitarian theory of tort law? Why are rational (as opposed to instinctive) defensive actions permitted by tort doctrine? To address these questions I will build on the property and liability rules framework. I argue that defensive conduct plays an...

In an economic perspective, punitive damages and class actions can be viewed as sharing a common economic function – creating optimal deterrence. Building on Parisi and Cenini (2010), we study the effect of alternative procedural regimes on the effectiveness of punitive damages and class...