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Full-Text Articles in Legal Remedies
A Financial Economic Theory Of Punitive Damages, Robert J. Rhee
A Financial Economic Theory Of Punitive Damages, Robert J. Rhee
Michigan Law Review
This Article provides a financial economic theory of punitive damages. The core problem, as the Supreme Court acknowledged in Exxon Shipping Co. v. Baker, is not the systemic amount of punitive damages in the tort system; rather it is the risk of outlier outcomes. Low frequency, high severity awards are unpredictable, cause financial distress, and beget social cost. By focusing only on offsetting escaped liability, the standard law and economics theory fails to account for the core problem of variance. This Article provides a risk arbitrage analysis of the relationship between variance, litigation valuation, and optimal deterrence. Starting with settlement …
Efficient Breach Of International Law: Optimal Remedies, 'Legalized Noncompliance,' And Related Issues, Eric A. Posner, Alan O. Sykes
Efficient Breach Of International Law: Optimal Remedies, 'Legalized Noncompliance,' And Related Issues, Eric A. Posner, Alan O. Sykes
Michigan Law Review
In much of the scholarly literature on international law, there is a tendency to condemn violations of the law and to leave it at that. If all violations of international law were indeed undesirable, this tendency would be unobjectionable. We argue in this Article, however that a variety of circumstances arise under which violations of international law are desirable from an economic standpoint. The reasons why are much the same as the reasons why nonperformance of private contracts is sometimes desirable- the concept of "efficient breach," familiar to modern students of contract law, has direct applicability to international law. As …