We claim that the endowment effect rarely justifies legal intervention in private ordering. We present the first theory, to our knowledge, to explain how institutions inhibit the endowment effect without altering people’s rights to their entitlements. The endowment effect is substantially...

The realization of market transactions often depends on decisions in groups in which members are anonymous and cannot communicate, but have interrelated outcomes. In a comprehensive study, we investigated the interaction of group effects, strategic effects and endowment effects in different...

A number of recent studies have explored the consequences of interracial peer effects on the academic and social performance of minority students. This article contributes to that discussion, focusing, however, on perceptions rather than behaviors. The analysis suggests that exposure to white...

The operating agreements of many business ventures include clauses to facilitate the exit of joint owners. In so-called Texas Shootouts, one owner names a single buy-sell price and the other owner is compelled to either buy or sell shares at that named price. Despite their prevalence in...

Racial restrictive covenants are private agreements prohibiting sale, rental, use or occupancy of properties by persons of designated races, ethnicities, nationalities and religions. Widely acknowledged for facilitating residential segregation, the Supreme Court ruled covenants unenforceable in...

A party dissatisfied with the contractual performance of a counterparty is typically able to pursue a variety of legal recourses. Within this apparent variety are two fundamental alternatives. The aggrieved party may (i) 'affirm' the contract and seek money damages or specific performance, or...

We show that parties in bilateral trade can rely on the default common law breach remedy of ‘expectation damages’ to simultaneously induce first-best relationship-specific investments of both the selfish and the cooperative kind. This can be achieved by writing a contract that specifies a...

If a seller delivers a good nonconforming to contract, European and US warranty laws allow consumers to choose between some money transfer and termination. Termination rights are, however, widely criticized, mainly for fear that the buyer may use nonconformity as a pretext for getting rid of a...