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...

This paper analyzes the cost and incentive properties of the standard of proof for a finding of negligence. In common law, the usual standard is for courts to decide on the basis of a so-called balance of probabilities or preponderance of the evidence. We show that, if producing information...

Cet article analyse l'utilisation efficace de l'information dans un problème de principal agent avec risque moral et neutralité au risque. On montre que, pour un système arbitraire d'information, toute l'information pertinente d'un point de vue incitatif peut être résumée par une...

We analyze the design of legal principles and procedures for court decision making in civil litigation. The objective is the provision of incentives for potential tort-feasors to exert care when evidence is imperfect and may be distorted by the parties. Efficiency is consistent with courts...

We consider the cost of providing incentives through tournaments when workers are inequity averse and performance evaluation is costly. The principal never benefits from empathy between the workers, by he may benefit from their propensity for envy depending on the costs of assessing performance....

We provide an integral condition for the ranking of general information systems in the agency problem. The condition has a straightforward economic interpretation in terms of the sensitivity of a cumulative distribution with respect to the agent's effort. The proposed criterion is shown to be...

We study the problem of deterring undesirable behavior in a moral hazard framework with risk averse individuals, noisy information and costly sanctions. We find that, if sanctions are a pure loss, a utilitarian society should use a bang-bang penalty scheme satisfying the maximum penalty...

Cet article analyse les propriétés de complémentarité et de substituabilité entre systèmes de surveillance et mécanismes incitatifs dans une relation principal-agent, lorsque les parties sont neutres à l'égard du risque et que l'agent fait face à une contrainte de solvabilité. À...