Category Archives: Law and Economics
Sergio Mittlaender, ‘Conflict and Property Law: The Hidden Costs of Takings and of Liability Rule Protection’
ABSTRACT This paper presents a novel argument for the law’s preference for property over liability rules that is based on their potential to reduce socially costly forms of retaliation by victims of takings. Property rules can better mitigate conflict and discourage costly punishment by victims, thereby increasing social welfare. This hypothesis is tested empirically in […]
Steven Miskinis, ‘The Return of the Excluded’
ABSTRACT A basic tenet of property theory is the superior efficiency of private property over forms of common ownership. The commons are, as Garrett Hardin famously said, subject to a tragedy of overuse and waste by co-users precisely because no one can stop the use and overuse by others. Private property triggers a right to […]
Parisi, Bigoni, Bortolotti and Zhang, ‘Do Contract Remedies Affect Efficient Renegotiation? An Experiment’
ABSTRACT Rational parties enter into a contract if the agreement is mutually beneficial. However, after the contract is formed, changes to the costs and/or benefits of performance may render the original contract undesirable. In this paper, we carry out an incentivized experiment to study the effect of alternative remedies on the parties’ ability to renegotiate […]
Steven Shavell, ‘Continuances and Uncertainty in the Course of Adjudication’
ABSTRACT The myriad uncertainties common to the process of adjudication – concerning evidence that opposing parties will present, legal issues that will become relevant, illness of witnesses, and the like – lead to two social problems. First, when unanticipated events occur, the information that parties will be able to provide to courts may be inadequate. […]
Guillaume Vuillemey, ‘The Origins of Limited Liability: Catering to Safety Demand with Investors’ Irresponsibility’
ABSTRACT Limited liability is a key feature of corporate law. Using data on asset prices and capital flows in mid-19th century England, I argue that its liberalization was not decided to relax firms’ financing constraints, but to satisfy investors’ demand for ‘safe’ stores of value. Limited liability eliminated adverse selection about the quality of other […]
Guanghua Yu, ‘The Idea of Private Law: A Communitarian version of Kantian Rights’
ABSTRACT This Article begins with the introduction of two competing schools in private law. One school claims that private law is to achieve efficient resource allocation or wealth maximization. The other school follows the bipolar structure of corrective justice with the assistance of the Kantian theory. While each side is very strong and elegant, neither […]
‘Professor Keating’s Third Way’
Gregory C Keating, Reasonableness and Risk: Right and Responsibility in the Law of Torts (2022). In discussing tort theory, Professor Gregory Keating sometimes refers to a ‘third way’. By this, I take him to mean an approach to tort theory different than, and drawing from, the two major ways of explaining and/or justifying tort law. […]
de Rassenfosse, Jaffe and Waldfogel, ‘Intellectual Property and Creative Machines’
ABSTRACT The arrival of creative machines – software capable of producing human-like creative content – has triggered a series of legal challenges about intellectual property. The outcome of these legal challenges will shape the future of the creative industry in ways that could enhance or jeopardize welfare. Policymakers are already tasked with creating regulations for […]
Grosch and Fischer, ‘Contract Breach with Overconfident Expectations: Experimental Evidence on Reference-Dependent Preferences’
ABSTRACT This study examines the effect of agents’ overconfident expectations in their production on their contract breach. Drawing on a reference-dependent framework, we theoretically deduce propositions for compliance to agreements where an agent exhibits overconfidence and loss aversion. We conduct lab experiments with a multiple-stage design and find that overconfident agents are more likely to […]
Jonathan Sarnoff, ‘The Information Costs of Exclusion’
ABSTRACT The appropriate scope of the right to exclude is among the most contentious topics in property theory: while some defend direct state regulations that override owners’ right to exclude unwanted uses from their property, others defend greater deference to owners’ authority, implemented by stringent enforcement of the right to exclude. In recent years, scholars […]