In order to regulate risk taking efficiently, tort liability rules governing organizations' liability for torts by their agents should ensure that organizations both want their agents to take optimal precautions and benefit from using cost-effective mechanisms to regulate agents. This chapter...

This Article provides an economic analysis of optimal negligence liability for physicians and Managed Care Organizations explicitly modeling the role of physician expertise and MCO authority. We find that even when patients anticipate the risks imposed on them, physicians and MCOs do not take...

During a recent study of how 1991 federal sentencing guidelines have affected the penalties that federal courts impose on public corporations, we performed an independent evaluation of the quality of the data on corporate sanctions that the U.S. Sentencing Commission releases to the public. Our...

To serve as an effective basis for positive or normative analysis of law, theoretical law and economics analysis must be predicated on models that accurately capture the essential characteristics of the decision-making environment, decision-makers’ available choices, and individuals’...

In this article, we undertake the first analysis of optimal individual and corporate liability for organizational misconduct that incorporates crucial insights from psychology about people’s motivations, their decision-making processes, and how laws and organizations affect people’s...

This Chapter identifies the features of the corporate compliance function and the steps countries should take to induce companies to implement effective compliance. The compliance function is comprised of the set of corporate inventions that deter corporate misconduct. Using empirical...

Federal Sentencing Guidelines Governing Organizations purport to constrain judicial discretion over corporate criminal penalties. We investigate the effect on courts' sentencing decisions using pre- and post-Guidelines data, including evidence on cases and penalties that the Guidelines do not...

Behavioral Economic Analysis of Law argues that people do not behave consistent with rational choice theory, and moreover that the deviations from rational behavior are systematic. These systematic deviations from rational choice theory present a challenge to conventional Law and Economics....

The goal of this paper is to examine optimal individual and entity-level liability for negligence when expected accident costs depend both on the agent's level of expertise and the principal's level of authority. We consider these issues in the context of physician and managed care organization...

A number of corporate law scholars have recently proposed granting shareholders an enhanced right to oversee the use of takeover defenses. While these "shareholder choice" proposals vary somewhat in their content, they generally agree that shareholder oversight is justified if and only if...