Optimal Liability Design Under Risk and Ambiguity

This paper develops an original mean-variance model able to capture the disposition of the parties towards both standard risk and ambiguity. Ambiguity arises when the causal link between conduct and harm is not univocal, as is frequently the case with toxic torts. Risk aversion and ambiguity aversion tend to have a similar impact on optimal liability rules if greater care reduces the ambiguity perceived by the parties, i.e. if safety and predictability go hand in hand. Strict liability dominates negligence when the injurer has lower degrees of risk and ambiguity aversion than the victim and can formulate less ambiguous estimates of the probability of harm. The reverse result only holds under stronger conditions

Prosecutorial discretion and criminal deterrence

This paper develops a model of law enforcement in which the indicted and the enforcer can negotiate the level of the penalty by means of a settlement. The emphasis of the analysis is on the credibility of the set- tlement offer: the enforcer cannot threaten an incredibly large conviction rate if the negotiation fails. The introduction of the negotiation stage brings about several novel features of the optimal enforcement policy, one of which is the possibility that a finite penalty is optimal (globally or locally). We show that the skimming process associated with the negotiation stage reduces the incen- tives for the enforcer to carry out thorough investigations and increases the rate of noncompliance

The optimal scope of trade secrets law

The paper investigates the optimal scope of trade secrets law. In the model, one innovative firm invests resources first to produce knowledge, and then to protect it from unwanted disclosure. A rival firm invests to ferret out this knowledge. Trade secrets law affects this "secrecy contest" by reducing the probability of unwanted disclosure given the efforts of the parties. We show how optimal trade secrets policy depends on structural market features and cost parameters. In the final section, we consider the limit case in which the innovation lies on the face of the product, and derive the optimal scope of legal provisions preventing copycat imitation of products (unfair competition, passing off)

Efficient liability law when parties genuinely disagree

This article compares the classic liability rules, negligence and strict liability, under the hypothesis that injurers and victims formulate subjective beliefs about the probabilities of harm. Parties may reasonably disagree in their assessment of the precautionary measures available: a measure regarded as safe by one party may be regarded as not safe by the other. By relying on the notions of Pareto efficiency and "No Betting" Pareto efficiency, the article shows that negligence is the optimal liability rule when injurers believe that the probability of harm is always higher than the victims do, while strict liability with overcompensatory damages is the optimal rule in the opposite case. The same results apply to bilateral accidents and, specifically, to product-related harms in competitive markets. Overcompensatory ("punitive") damages provide consumers with insurance against their own pessimism

Legal Change in the Face of Risk Averse Subjects: A Generalization of the Theory

This study investigates the optimal nature of law making under uncertainty. I focus on a case in which a harmful activity will be subjected to some regulatory measures (a standard, exposure to liability, or a corrective tax). The benefits and costs of precaution are ex-ante uncertain, and this places a risk burden on both injurers and victims. The optimal policy should, at the same time, strike a balance between benefits and costs of the measures, and attenuate the ex-ante risk. Whether measures should be made stronger or softer depends on the size and the sign of the shocks affecting the parties (positive or negative) and their disposition towards risk. With corrective taxes, it also depends on the elasticity of precautions with respect to the tax rate

Structure and Backbone Dynamics of Apo- and Holo-cellular Retinol-binding Protein in Solution

Retinoid-binding proteins play an important role in regulating transport, storage, and metabolism of vitamin A and its derivatives. The solution structure and backbone dynamics of rat cellular retinol-binding protein type I (CRBP) in the apo- and holo-form have been determined and compared using multidimensional high resolution NMR spectroscopy. The global fold of the protein is consistent with the common motif described for members of the intracellular lipid-binding protein family. The most relevant difference between the NMR structure ensembles of apo- and holoCRBP is the higher backbone disorder, in the ligand-free form, of some segments that frame the putative entrance to the ligand-binding site. These comprise alpha-helix II, the subsequent linker to beta-strand B, the hairpin turn between beta-strands C and D, and the betaE-betaF turn. The internal backbone dynamics, obtained from 15N relaxation data (T1, T2, and heteronuclear nuclear Overhauser effect) at two different fields, indicate several regions with significantly higher backbone mobility in the apoprotein, including the betaC-betaD and betaE-betaF turns. Although apoCRBP contains a binding cavity more shielded than that of any other retinoid carrier, conformational flexibility in the portal region may assist retinol uptake. The stiffening of the backbone in the holoprotein guarantees the stability of the complex during retinol transport and suggests that targeted retinol release requires a transiently open state that is likely to be promoted by the acceptor or the local environment