Prepondeance of the Evidence: Tort Rules and the Efficient Standard of Proof

This paper analyzes the cost and incentive properties of the standard of proof for a finding of negligence. In common law, the usual standard is for courts to decide on the basis of a so-called balance of probabilities or preponderance of the evidence. We show that, if producing information about defendants' behavior is socially costly, preponderance of the evidence is the only cost-and-incentive efficient standard of proof consistent with a negligence rule. Cet article analyse les propriétés d'efficience du standard ou degré de preuve requis pour un jugement en responsabilité civile. Dans la common law, le tribunal décide selon la balance des probabilités en fonction du principe de la prépondérance de la preuve. Nous montrons que, si la production d'information sur le comportement du défendeur est socialement coûteuse, ce standard de preuve est le seul qui soit efficace sur le plan coûts-incitations dans un contexte de reponsabilité pour faute.Negligence, preponderance of the evidence, standard of proof, tort rules.

Inequity Aversion in Tournaments

We consider the cost of providing incentives through tournaments when workers are inequity averse and performance evaluation is costly. The principal never benefits from empathy between the workers, by he may benefit from their propensity for envy depending on the costs of assessing performance. More envious employees are preferred when these costs are high, less envious ones when they are low.Tournaments, Inequity aversion, Envy, Incentives, Performance

Group vs. Individual Performance Pay When Workers Are Envious

We consider the effects on reward systems of workers' concern with relative pay by comparing the wage costs of providing incentives through group versus individual bonus schemes. When workers have a propensity for envy, either scheme may be the least cost one depending on the workers' outside opportunities and on the precision of available performance measures. The result follows from the trade-off between the dissatisfaction associated with the prospect of unequal pay and the incentives it generates when workers are envious.Bonus, efficiency wage, envy, fairness, incentives, moral hazard, performance measure, pay equality, wage compression

Rules of Proof, Courts, and Incentives

We analyze the design of legal principles and procedures for court decision-making in civil litigation. The objective is the provision of appropriate incentives for potential tort-feasors to exert care, when evidence about care is imperfect and may be distorted by the parties. Efficiency is shown to be consistent with courts adjudicating on the basis of the preponderance of evidence standard of proof together with common law exclusionary rules. Inefficient equilibria may nevertheless also arise under these rules. Directing courts as to the assignment of the burden of proof is then useful as a coordination device. Alternatively, burden of proof guidelines are unnecessary if courts are allowed a more active or inquisitorial role, by contrast with that of passive adjudicator.Evidentiary rules, standard of proof, burden of proof, inquisitorial, adversarial, discovery, deterrence

Inequity Aversion in Tournament

We consider the cost of providing incentives through tournaments when workers are inequity averse and performance evaluation is costly. The principal never benefits from empathy between the workers, but he may benefit from their propensity for envy depending on the costs of assessing performance. More envious employees are preferred when these costs are high, less envious ones when they are low. Nous analysons le coût des mécanismes incitatifs de type tournois lorsque les travailleurs ont de l'aversion pour l'iniquité et que l'évaluation des performances est coûteuse. L'empathie entre les travailleurs n'est jamais bénéfique pour le principal, mais une propension à l'envie peut être avantageuse selon l'importance des coûts associés à la mesure de la performance. Lorsque ces coûts sont élevés, le principal préférerait des travailleurs plus envieux; à l'inverse, il préférerait qu'ils le soient moins si ces coûts sont faibles.Tournaments, Inequity Aversion, Envy, Incentives, Performance, Tournois, aversion pour l'iniquité, envie, incitations, performance

Rules of Proof, Courts, and Incentives

We analyze the design of legal principles and procedures for court decision-making in civil litigation. The objective is the provision of appropriate incentives for potential tort-feasors to exert care, when evidence about care is imperfect and may be distorted by the parties. Efficiency is shown to be consistent with courts adjudicating on the basis of the preponderance of evidence standard of proof together with common law exclusionary rules. Inefficient equilibria may nevertheless also arise under these rules. Directing courts as to the assignment of the burden of proof is then useful as a coordination device. Alternatively, burden of proof guidelines are unnecessary if courts are allowed a more active or inquisitorial role, by contrast with that of passive adjudicator.evidentiary rules, standard of proof, burden of proof, inquisitorial, adversarial, discovery, deterrence

Group vs. Individual Performance Pay When Workers Are Envious

We compare the wage costs of providing incentives through group versus individual bonus schemes. When workers are envious, either scheme may be the least cost one owing to the trade-off between the dissatisfaction with the prospect of unequal pay and the incentives it generates Nous comparons les coûts salariaux des rémunérations incitatives par bonus de groupe et par bonus individuels. Quand les travailleurs ont une propension à l'envie, l'un ou l'autre de ces modes de rémunération peut s'avérer le moins coûteux étant donné l'arbitrage entre l'insatisfaction associée aux inégalités salariales et les incitations à l'effort qu'elles engendrent.Bonus, Efficiency Wage, Envy, Fairness, Incentives, Bonus, salaire d'efficience, envie, équité, incitations

Costly Sanctions and the Maximum Penalty Principle

We study the problem of deterring undesirable behavior in a moral hazard framework with risk averse individuals, noisy information and costly sanctions. We find that, if sanctions are a pure loss, a utilitarian society should use a bang-bang penalty scheme satisfying the maximum penalty principle. If sanctions are monetary but imposing sanctions involves a sufficiently large resource cost, the maximum feasible sanction should also be imposed with positive probability. As a possible justification for endogenously limiting sanctions, we derive the optimal penalty scheme under a Rawlsian welfare function. The maximum sanction actually imposed is then smaller than in the utilitarian case, but it is imposed more frequently. Cet article analyse le problème de la dissuasion des comportemenmts indésirables dans un contexte d'aléa moral avec aversion au risque, information imparfaite et coûts de sanction. Nous montrons que, si les sanctions imposées aux individus sont une pure perte sociale, la politique utilitariste optimale consiste à utiliser un mécanisme de sanction dichotomique satisfaisant le principe de la sanction maximale. Si les sanctions sont pécuniaires mais qu'imposer des sanctions implique un coût en ressource suffisamment élevé, la sanction maximale permise devrait également être imposée avec une probabilité positive. Comme justification possible de sanctions limitées, nous analysons la politique de dissuasion optimale avec une fonction de bien-être rawlsienne. Le sanction maximale est dans ce cas inférieure à celle d'une politique utilitariste, mais elle est imposée plus fréquemment.Deterrence, optimal enforcement, moral hazard, maximal penalty, Rawl's criterion

Deterrence vs Judicial Error: a Comparative View of Standards of Proof

We argue that the common law standard of proof, given the rules of evidence, does not minimize expected error as usually argued in the legal literature, but may well be efficient from the standpoint of providing maximal incentives for socially desirable behavior. By contrast, civil law's higher but somewhat imprecise standard may be interpreted as reflecting a tradeoff between providing incentives and avoiding judicial error per se. In our model, the optimal judicial system has rules resembling those in the common law when providing incentives is paramount. When greater weight is given to avoiding error, the optimal system has civilian features.Standard of proof, burden of proof, common law, civil law, evidentiary rules

A discussion of stock market speculation by Pierre-Joseph Proudhon

The object of this contribution is to present the ideas behind the thinking of the French economist Pierre-Joseph Proudhon (1809-1865) in relation to the causes and effects of Stock market speculation. It is based upon the works of this author but particularly on his “Manuel du spéculateur à la Bourse” (Stock Market Speculator Manual) edited in 1857 in Paris. Compared to the markets of today, however, the stock market described by Proudhon appears embryonic. Nevertheless it represents the location for transactions in financial assets, commodities, precious metals and even some transactions involving options. This contribution is organised in the following manner - the first section is devoted to the development of Proudhon's thought in relation to speculation. It is divided into two parts. The first part is dedicated to Pierre-Joseph Proudhon's definitions of stock market speculation or gambling with shares that for him served no purpose either from a human or economic perspective and was therefore condemnable and to be contrasted with entrepreneurial speculation that, even though it is a highly-risky activity, involves the spirit of enterprise and provides the lifeblood of economic growth. The second part allows us to present Pierre-Joseph Proudhon's propositions in relation to restricting the speculation that he considers obnoxious. The second section has two objectives: one part places in perspective the views of Proudhon and the characteristics of stock market activity under the Second Empire whilst the other part examines current-day aspects of the characteristics evoked by Proudhon. We are interested especially in the question of the regulation and that of the relevance today of certain accounting practices.Proudhon ; speculation ; stock market ; regulation of financial markets