Judge Learned Hand’s opinion in United States v. Carroll Towing Co. (1947) is canonized in the law and economics literature as the first use of cost-benefit analysis for determining negligence and assigning liability. This paper revisits the original case in which the famous Hand formula was...

Car owners are liable for property damage inflicted on other motorists. In most countries such liability must be insured by law. That law may favor expensive or heavy vehicles, prone to suffer or inflict large losses. This paper explores links between liability rules and vehicle choice. It...

Car owners are liable for property damage inflicted on other motorists. In most countries such liability must be insured by law. That law may favor expensive or heavy vehicles, prone to suffer or inflict large losses. This paper explores links between liability rules and vehicle choice. It...

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...

Sanctions are often so weak that a money maximizing individual would not be deterred. In this paper I show that they may nonetheless serve a forward looking purpose if sufficiently many individuals are averse against advantageous inequity. Using the Fehr/Schmidt model (QJE 1999) I define three...

Economic theory has provided an estimable intuition in understanding the perplexing ideologies in law, in the areas of economic law, tort law, contract law, procedural law and many others. Most legal systems require the parties involved in a legal dispute to exchange information through a...

Sharing a damage that has been caused by several individuals is a difficult problem that courts often face. Even if there exist basic principles and rules to apportion damages among them (like for instance in the third Restatement of Torts promulgated in May 1999), legal scholars are still...

Sanctions are often so weak that a money maximizing individual would not be deterred. In this paper I show that they may nonetheless serve a forward looking purpose if sufficiently many individuals are averse against advantageous inequity. Using the Fehr/Schmidt model (QJE 1999) I define three...

In a world with risk-neutral agents, liability rules will only induce efficient behavior 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 internalization of costs. A mechanism is...

The past and current reluctance of firms and individuals to use private enforcement suggests that there are limited incentives for self-help. The key contribution of private enforcement to overall deterrence derives from cases which would not otherwise be brought, not simply because of resource...