In the law and economics literature the question of efficiency of liability rules has primarily been analyzed in the context of two-party interactions in which identities of the victim and the injurer in case of occurrence of accident, are a priori certain. The main conclusion that has emerged...

In the law and economics literature liability is generally regarded as an instrument which provides potential tortfeasors with incentives for optimal care taking. The question, however, arises whether liability can still provide those incentives when risks are unknown. That is the central...

Does a more risk-averse individual put greater effort to abide by legal rules than the less risk-averse? Or are the criminals really a race apart who is exceptionally risk prone? This paper examines the relationship between the law-abiding effort of an individual and his degree of risk aversion....

This paper develops an original mean-variance model able to capture the disposition of the parties towards both standard risk and ambiguity. Ambiguity arises when the causal link between conduct and harm is not univocal, as is frequently the case with toxic torts. Risk aversion and ambiguity...

Consider legal uncertainty as uncertainty about the legality of a specific action. In particular, suppose that the threshold of legality is uncertain. I show that this legal uncertainty raises welfare. Legal uncertainty changes deterrence in opposite directions. The probability of conviction...

Consider legal uncertainty as uncertainty about the legality of a specific action. In particular, suppose that the threshold of legality is uncertain. I show that this legal uncertainty raises welfare. Legal uncertainty changes deterrence in opposite directions. The probability of conviction...