Under the doctrine of vicarious liability, a deep-pocket principal is often held responsible for a third-party harm caused by a judgment-proof agent's negligence. We analyze the incentive contract used by the principal to control the agent's behavior when a court can make an error in determining...

When a contract is signed between two economic agents, it is likely to produce some effect on non-contracting, third parties and provide new information to the contracting parties. This thesis examines how such third party externality and newly generated information should affect the initial...