We study the standard economic model of unilateral accidents under the assumption that the injurers have limited assets. We identify a second-best optimal rule that selects as due care the minimum of first-best care and a level of care that takes into account the wealth of the injurer. We show...

In this paper we provide a strategic explanation for the spontaneous convergence of legal rules that nevertheless, in many instances, falls short of unification across jurisdictions. We identify a free-riding problem and discuss its implications for legal integration. We argue that countries...

In an influential paper, Polinsky and Che propose that litigation can be made a more cost-effective tool for setting primary activity incentives (such as for product safety or promissory performance) by reducing plaintiffs’ recovery while simultaneously raising defendants’ damages....