A Neglected Interdependency in Liability Theory

The standard economic model of bilateral precaution concludes that (in the absence of uncertainty, misperception, or error) all negligence-based liability rules induce socially optimal behavior by both injurers and victims. This paper generalizes the standard model to consider situations in which one party’s precaution affects not only expected accident loss, but also directly affects the other party’s effort—or cost—of taking precaution. If the injurer’s care affects the victim’s precaution costs (but not vice versa), most of the standard results continue to hold (except for strict liability with a defense of contributory negligence). If the victim’s precaution affects the injurer’s costs of care (but not vice versa), only strict liability with a defense of contributory negligence leads to the social optimum, while the other negligence-based rules lead to suboptimal outcomes. In the general case (where each party’s costs depend on both parties’ levels of precaution), none of the standard liability rules induce socially optimal behavior in both parties. The paper’s other main result concerns the possibility of self-interested, negligent behavior in equilibrium. Under negligence with a defense of contributory negligence, the only equilibrium is in the mixed strategies of both injurer and victim. This involves the parties choosing (with strictly positive probability) to behave negligently, and gives rise to the possibility of successful litigation in equilibrium, even though there is no uncertainty, misperception, or error. The paper concludes by considering the implications of these results for the design of liability rules.law and economics, and tort law

Severance -- A Means of Minimizing the Role of Burden and Expense in Determining the Outcome of Litigation

This article is divided into two main parts. First, it is assumed that the controlling question is how severance affects the likely outcome of litigation by altering the normal incidence of expense and burden. Then the article examines the question of whether there are overriding considerations (particularly the need for tempering by reference to the entire controversy) which require that severance be withheld even if dictated by considerations of economy

The Economic Structure of Renegotiation and Dispute Resolution in the WTO/GATT System

The treaty creating the WTO replaced the GATT dispute resolution system, which contained no formal sanctions for breach of agreement as a practical matter, with a system that results in centrally authorized sanctions against recalcitrant violators of WTO trade agreements. We examine the important features of the new system, and argue that the institutionalization of a sanctioning mechanism was not motivated by a perceived need to increase the penalty for violations, but rather by a need to decrease the penalty. In particular, the GATT system relied on unilateral retaliation and reputation to police the bargain, and toward its end unilateral retaliation became excessive, interfering with opportunities for efficient breach. The WTO mechanism for arbitrating the magnitude of proposed sanctions is the major innovation under WTO law, and ensures that sanctions are not set too high

The Regulation of Subsidies Affecting International Trade

We will begin by examining the basic contours of the present GATT regulation of subsidies. We will then consider the theory of comparative advantage underlying the GATT regime and introduce the complications of externalities and the governmental process designed to take account of them. Finally, we will make some tentative suggestions for changes in rules and institutions that might serve to improve the present state of affairs

A radial analogue of Poisson's summation formula with applications to powder diffraction and pinwheel patterns

Diffraction images with continuous rotation symmetry arise from amorphous systems, but also from regular crystals when investigated by powder diffraction. On the theoretical side, pinwheel patterns and their higher dimensional generalisations display such symmetries as well, in spite of being perfectly ordered. We present first steps and results towards a general frame to investigate such systems, with emphasis on statistical properties that are helpful to understand and compare the diffraction images. An alternative substitution rule for the pinwheel tiling, with two different prototiles, permits the derivation of several combinatorial and spectral properties of this still somewhat enigmatic example. These results are compared with properties of the square lattice and its powder diffraction.Comment: 16 pages, 8 figure