Category Archives: Law and Economics

Bohdan Petrovych Karnaukh, ‘Fault in Tort Law: Moral Justification and Mathematical Explication Civil Law and Civil Procedure’

Abstract The article has two main objectives: (1) to reveal why the fault principle is considered to be morally superior to no-fault liability in primitive law; and (2) to find out the essence of fault in modern tort law and then to express the concept of fault in the most precise manner possible, namely through […]

Peter Mascini, ‘Law and Economics’ Responses to the Threat of Its Initial Success’

Introduction The economic analysis of law succeeded more than even its most optimistic founders expected. Why? Lawyers lacked a scientific theory to predict the effects of sanctions upon behavior, developed from economics after 1960 (Cooter, 1995). In other words, lawyer-economists have succeeded in expanding the explanation of individual market behavior to the law by providing […]

Enrico Baffi, ‘On the Efficiency of Indemnification in Cases of Necessity: Is American Common Law Inefficient?’

Abstract This paper seeks to give a new interpretation of the rules that provide for compensation or indemnification when a person takes an action in a case of necessity. The person acting out of necessity will also take into account the sum of money that he/she will be required to pay if the necessary action […]

Zywicki and Stringham, ‘Austrian Law and Economics and Efficiency in the Common Law’

Abstract Is the common law efficient? Neoclassical economists debate whether our inherited systems of judge-made law maximize wealth whereas Austrian economists typically adopt much different standards. The article reviews neoclassical and Austrian arguments about efficiency in the common law. After presenting Hayek’s views on the common law as a spontaneous order it concludes that the […]

Yonathan Arbel, ‘Reputation Failure: Market Discipline and Its Limits’

Abstract Free-market advocates seek to repeal broad swaths of tort, contract, and consumer law, trusting reputation to provide effective market-discipline. Their core belief is that reputation assures honest dealings because a seller reputed to sell inferior goods will lose business. Realizing that, the rational seller will behave honestly in order to maximize profits, thus obviating […]

Nathan Atkinson, ‘Designing Remedies to Compensate Plaintiffs for Unobservable Harms’

Abstract Despite the vast sums transferred through the legal system, the foundations of the procedures used to compensate plaintiffs for unobservable losses remain unclear. Standard remedies can compensate plaintiffs for unknown harms, but it is expensive to do so. Damage awards will generally undercompensate or overcompensate a plaintiff whose true harm is unknown, while equitable […]

‘The Costs of Overburdened Courts: New Evidence’

“How large are the welfare losses associated with inefficient courts? Legal scholars and economists have long grappled with this important question because inefficiencies in the court system are jointly determined with other factors. For example, poorer countries often have more poorly designed laws, as well as fewer and less qualified court staff. This makes assessing […]

Bai, Mao and Tao, ‘Breach Inducement Activities and Performance of Breach Remedies’

Abstract This paper offers an explanation for why the courts generally prefer expectation damages instead of specific performance or liquidated damages. The paper takes into account the possibility of breach inducement activities – actions taken by one contracting party to make it more costly for the other party to perform the contract between them. The […]

Avraham and Wickelgren, ‘Third Party Litigation Funding with Informative Signals: Equilibrium Characterization and the Effects of Admissibility’

Abstract Litigation funders provide non-recourse loans to plaintiffs who repay these loans if and only if they prevail. The loan’s interest rate reflects the funder’s information about the strength of the plaintiffs’s case. We analyze a monopoly and a two-firm Bertrand model. Bertrand competition does not eliminate funder profits or inefficiency. Making the funding contract […]

‘Behavioral law and economics’

“We are delighted to share the news about the publication of our new book, Behavioral Law and Economics (OUP 2018). This book aims to serve as a gateway into the world of behavioral analysis. It enables readers to familiarize themselves with the rich economic and psychological literature on judgment and decision-making, and allows them to […]