The small village of Cheshire, Ohio was recently acquired in its entirety by the firm whose giant power plant, located at the edge of town, caused it serious pollution problems. Although the plant was worth substantially more than the town, this was not a simple Coasean bargain. This paper...

The theory of adverse selection in insurance markets has been enormously influential among scholars, regulators, and the judiciary. But empirical support for adverse selection has been much less persuasive, and several recent studies have found little or no evidence of such selection in...

Young adults ages 18-29 have the lowest insurance rate of any age group in the United States. Part of the reason for this is that many young adults underestimate their risk of facing high medical costs - the risk is low, but not as low as these “young invincibles” believe. To address this,...

Courts frequently say that wilfulness matters when awarding damages for breach of contract. Such thinking is, however, at odds with the basic expectation damages principle: if we are trying to put the injured promisee in the position she would have been in but-for the breach, the promisor's...

James Heckman was the 2000 Nobel Laureate in Economics. This short paper reviews the methodological and substantive contributions Heckman has made to the empirical study of law. Heckman's work is shown to be important because he has developed techniques to address fundamental problems such as...

A substantial fraction of insurance bought by consumers and small businesses is sold through insurance agents rather than purchased directly from firms. Insurance agents can serve valuable “market-making” functions by providing information to both sides of a transaction; and they can offer...