Designing a contract is often more of an economic than a legal problem. A good contract protects parties against opportunistic behavior while providing motivation to cooperate. This is where economics and, especially contract theory, may prove helpful by enhancing our understanding of incentive...

In this article, we show experimentally that individuals can adapt their decision making to social environments, like markets, and respond strategically to biases, such as regret aversion. We find they can employ herding as a behaviorally rational strategy to improve their expected outcomes and...

Trading is more than a personal valuation of own property. Traders try to anticipate the WTP potential buyers have for the good they want to sell. They do not focus on the value the entitlement has for them, their personal valuation is only a reservation price. The law analyzes the Endowment...

The text presents different strategies for institutionalizing social sciences in judicial methodology. Law has invented a successful method for treating the corpus of law as if it were a rational, coherent entirety. The legal system counterfactually imposes this methodological imperative on...

Anticommons are a special kind of mixed-motive dilemma in which negative effects for society are caused by the excessive use of exclusion rights. In two fully incentivized experiments on trading goods with risky prospects, we disentangle three psychological sources that have been suggested to...

Recent research in experimental law and economics shows that the imposition of a fine, intended to deter some harmful behavior, may crowd out moral motivation: the behavior occurs more frequently even though a payment is charged to discourage it. In A Fine is a Price, Gneezy and Rustichini...