Contrary to the conventional assumption that individuals maximize payoffs, robust experimental studies show that individuals who face repeated choices involving probabilistic costs and benefits often make sub-optimal decisions by applying the strategy of “probability matching.” The following...

Many injurers now offer to buy out victims' property to reduce harm. This pa- per examines the e¢ ciency of buyouts negotiated in the shadow of regulation and liability rules which require injurers to take e¢ cient precautions. It shows that if the social bene?t from precautions is increasing...

Injurers often purchase the property of potential victims to avoid liability or to comply with regulations. This paper shows that injurers subject to cost–benefit standards could profit from buying out victims even if they attach no value to the victims' property. Because buyouts allow...

Harsh sanctions are conventionally assumed to primarily benefit vulnerable targets. Contrary to this perception, this article shows that augmented sanctions often serve the less vulnerable targets. While decreasing crime, harsher sanctions also induce the police to shift enforcement efforts from...

Harsh sanctions are conventionally assumed to primarily benefit vulnerable targets. Contrary to this perception, this article shows that augmented sanctions often serve the less vulnerable targets. While decreasing crime, harsher sanctions also induce the police to shift enforcement efforts from...

Under the conventional tort law paradigm, a tortfeasor behaves unreasonably when two conditions are met: the tortfeasor could have averted the harm by investing in cost-effective precautions and failed to do so, and other, more cost-effective precautions were not available to the victim. Torts...

An injurer’s activity often exposes multiple potential victims to the risk of harm. We show that under negligence—the tort system’s dominant regime—such victims face a collective-action problem in choosing their activity levels. An increase in one victim’s activity level confers a...