Private Law Theory

ABSTRACT
We study the optimal civil justice design in a two-sided private information environment. The fundamental goals of the civil justice system and the optimal production of evidence are considered in our design. We characterize the optimal civil justice mechanism, and demonstrate that this mechanism maximizes social welfare by providing access to justice to the victims and maximal compensation to the victims confronting liable injurers at the minimum expected cost of producing evidence. We show that full revelation of private information requires the production of evidence only in a subset of legal cases. We provide conditions for an optimal cost-allocation rule.

Landeo, Claudia M and Nikitin, Maxim and Izmalkov, Sergei, Optimal Civil Justice Design (April 25, 2024).