This paper analyzes the efficient use of information in an agency relationship with moral hazard, when parties are risk-neutral. We show that, given an arbitrary information system, all relevant information from a mechanism-design point of view can be summarized by a binary statistic. We then...

We argue that the common-law standard of proof, given the rules of evidence, does not minimize expected error as usually argued in the legal literature, but may well be efficient from the standpoint of providing maximal incentives for socially desirable behavior. By contrast, civil law's higher...

I examine the case where fulfillment of a contractual commitment is only imperfectly verifiable and ask whether the court should then tell the truth regarding the action in dispute. I show that truth seeking does not maximize the expected surplus from contractual relationships. From the parties'...

We provide a comparison of the adversarial and inquisitorial trial procedures. We find that social costs associated with a given level of justice are always smaller under the adversarial rule. Nevertheless, the inquisitorial rule may be better because it allows for state control of all the...