Under contingent fees the attorney gets a share of the judgment; under conditional fees he gets an upscale premium if the case is won, a premium unrelated, however, to the adjudicated amount. This article compares conditional and contingent fees in a framework where lawyers choose between a safe...

An antitrust authority deters collusion using fines and a leniency program. Unlike in most of the earlier literature, our firms have imperfect cumulative evidence of the collusion. That is, cartel conviction is not automatic if one firm reports: reporting makes conviction only more likely, the...

Physicians choose capacity before demand materializes; actual demand may be higher or lower than capacity. If a physician's capacity exceeds demand, she may have an incentive to overtreat, i.e., she may provide unnecessary treatments to use up idle capacity. By contrast, with excess demand she...

Two firms produce a product with a horizontal and a vertical characteristic that we call quality. The difference in the quality levels determines how the firms share the market. Consumers do not observe quality before purchase. Under non-comparative advertising a firm signals its own quality,...

Increasing penalty structures for repeat offenses are ubiquitous in penal codes, despite little empirical or theoretical support. Multi-period models of criminal enforcement based on the standard economic approach of Becker (1968) generally find that the optimal penalty structure is either flat...

Increasing penalty structures for repeat offenses are ubiquitous in penal codes, despite little empirical or theoretical support. Multi-period models of criminal enforcement based on the standard economic approach of Becker (1968) generally find that the optimal penalty structure is either flat...

This paper analyzes the frequently-observed phenomenon that firms offer product warranties that are of much shorter duration than the life expectancy of these products. It is shown that competitive equilibria may entail limitation of warranty duration if firms face adverse selection problems...

In a housing insurance market buildings have different damage probabilities. High-risk houses need investment, low-risk houses don't. Insurers use imperfect tests to assess risks. The market is a natural monopoly: with more than one active insurer, high-risk house owners continue to apply to...

This paper is about accidents involving two risk-neutral parties. Both parties engage in actions that are profitable but affect the magnitude of possible bilateral accidents. The authors analyze how the action choices can be decentralized by liability rules that assign the accident costs. If the...