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...

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...

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...

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 offers an option value-based rationale for the consideration of a non-compliance record in sentencing decisions. We study compliance decisions of a population of individuals who live for two periods. We show that when non-compliance benefits are random and independent across periods,...

Efforts to avoid punishment are generally deemed undesirable and therefore punished or otherwise regulated. In reality, however, not all avoidance efforts are punishable or regulable, at least not to the same degree. For practical or sometimes constitutional reasons, certain efforts to avoid...

This paper explores the effects of public enforcement, in general, and punishment, in particular, on crime levels if offenders can engage in avoidance activities. Avoidance reduces the probability or magnitude of punishment. In general, offenders can reduce their expected punishment either by...

This paper explores the effects of alternative tax rules regarding monetary sanctions and litigation costs on the levels of criminal activity and litigation expenditure. The key insight is that taxation may affect crime not only by changing the relative expected returns from legal and criminal...