This study shows that the effects of judgment proofness on precaution depend on whether the injurer can reduce the probability of the accident, the magnitude of the harm, or both. Different legal solutions to the problem are examined: punitive damages, average compensation, undercompensation,...

Although a punishment can be applied only once, the threat to punish can be repeated several times. This is possible because when parties comply, the punishment is not applied and can thus be used to support a new threat. We refer to this feature of sticks as the "multiplication effect." The...

Tort law is generally considered to be an instrument that improves incentives. Yet many people and groups (including firefighters and police officers) enjoy some form of immunity. I show that those who enjoy immunity typically externalize the precaution costs to some degree. I analyze an...

Sharing rules have a filtering effect on violations: they prevent the most harmful violations and let the least harmful ones occur. We show the conditions under which the filtering effect improves social welfare and argue that this may explain why, in most areas of the law, sharing rules are, in...

Abstract Introduction to the special issue on the Kauffman Foundation Conference on Intellectual Property and Innovation, held at St. Louis (USA) on April 2-3, 2009. This conference was organized by the Center on Law, Innovation and Economic Growth of the Washington University School of Law, and...

There is a remarkable tendency in modern legal systems to increasingly use carrots. This trend is not limited to legal systems but can also be observed in, for instance, parenting styles, social control mechanisms, and even law schools' teaching methods. Yet, at first glance, sticks appear to be...

Reducing income inequality is, in the eyes of many, one of the major political issues of this time. The conventional political approach to reduce income inequality is to raise taxes for the wealthy and redistribute the proceeds to the poor. This approach finds support in the economic literature,...

A fundamental scholarly norm holds that those who make normative statements should reveal their normative framework. I argue that all those who reject Kaldor-Hicks as the fundamental framework violate this fundamental scholarly norm by being non-transparent in some way."Kaldor-Hicks efficiency"...

Most people sign standard term contracts without reading them. This gives drafters an incentive to insert one-sided, inefficient terms. This problem can be solved directly by giving the drafter a duty to draft efficient terms, or indirectly by giving the signer a duty to read (which may remove...