This paper analyzes how income taxation affects optimal law enforcement. A key insight of the analysis is that if monetary sanctions are deductible, income taxation is equivalent to increasing offenders' wealth. This implies, for example, that income taxation reduces the social costs of crime...

This paper explores how the distribution of wealth affects the social costs of crime and law enforcement and whether more or less equality, in this regard, is socially desirable. Generally, the optimal distribution of wealth should balance the social costs of enforcing the law upon wealthy...

Economic models of income-producing crimes are usually formulated as a labor supply decision (or a portfolio problem) under uncertainty. As such, these models are easily affected by taxation. This paper incorporates the theory of taxation and risk taking into such a simple model of crime to...

Asymmetric information is widely considered to be a major obstacle to settlements. We argue that litigants facing asymmetric information can use a simple add-on to the settlement offer in order to overcome the information barriers to settlements. In particular, the informed party can promise to...

Executive stock options are a dominant component of managers pay in the United States. This common compensation feature entails two perverse side effects: driving managers to engage in manipulative practices, and generating excessive risk-taking. Tellingly, some scholars blame the first side...

This paper studies the role of commitment in the design of enforcement mechanisms when enforcement can remedy harm from non-compliance. We consider a game between an enforcement authority ("enforcer") and an offender in which either the enforcer or the offender may act as a Stackelberg leader....

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...