IDEAS home Printed from https://ideas.repec.org/a/ucp/jlstud/v32y2003p121-151.html
   My bibliography  Save this article

Correlated Values in the Theory of Property and Liability Rules

Author

Listed:
  • Ian Ayres
  • Paul M. Goldbart

Abstract

Louis Kaplow and Stven Shavell have shown that liability rules tend to efficiently harness the defendant’s private information when courts are imperfectly informed as to litigants’ valuations. But they claim that liability rules cannot harness private information when the disputants’ valuations are correlated. This article rejects the correlated-value claim. While correlated valuations create real problems of implementation, Kaplow and Shavell’s own harnessing result can be extended to redeem the usefulness of liability rules. When values are correlated, enlightened courts can enlarge the damages that takers expect to pay so as to induce efficient takings. The relative efficiency of property and liability rules turns out to be independent of whether the disputants’ values are correlated.

Suggested Citation

  • Ian Ayres & Paul M. Goldbart, 2003. "Correlated Values in the Theory of Property and Liability Rules," The Journal of Legal Studies, University of Chicago Press, vol. 32(1), pages 121-151, January.
  • Handle: RePEc:ucp:jlstud:v:32:y:2003:p:121-151
    DOI: 10.1086/368009
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1086/368009
    Download Restriction: Access to the online full text or PDF requires a subscription.

    File URL: https://libkey.io/10.1086/368009?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Ian Ayres & Paul Goldbart, "undated". "Optimal Delegation and Decoupling in the Design of Liability Rules," Yale Law School John M. Olin Center for Studies in Law, Economics, and Public Policy Working Paper Series yale_lepp-1026, Yale Law School John M. Olin Center for Studies in Law, Economics, and Public Policy.
    2. Cramton, Peter & Schwartz, Alan, 1991. "Using Auction Theory to Inform Takeover Regulation," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 7(1), pages 27-53, Spring.
    3. McAfee, R Preston & McMillan, John, 1987. "Auctions and Bidding," Journal of Economic Literature, American Economic Association, vol. 25(2), pages 699-738, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Hoffmann, Sandra A. & Hanemann, W. Michael, 2005. "Torts and the Protection of "Legally Recognized" Interests," Discussion Papers 10472, Resources for the Future.
    2. Chouinard Hayley H & Steinhoff Christina, 2008. "Split-Estate Negotiations: The Case of Coal-Bed Methane," Review of Law & Economics, De Gruyter, vol. 4(1), pages 233-258, July.
    3. Yun-chien Chang, 2015. "An economic and comparative analysis of specificatio (the accession doctrine)," European Journal of Law and Economics, Springer, vol. 39(2), pages 225-243, April.
    4. Sergio Di Nola & Matteo Rizzolli, 2005. "Regole di tutela e sanzioni: il caso della patente a punti," LIUC Papers in Ethics, Law and Economics 173, Cattaneo University (LIUC).
    5. Pasquale Lucio Scandizzo & Odin K. Knudsen, 2024. "The New Normalcy and the Pandemic Threat: A Real Option Approach," JRFM, MDPI, vol. 17(2), pages 1-27, February.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. U. Weitzel & S. Rosenkranz, 2007. "Bargaining in Mergers and Termination Fees," Working Papers 07-06, Utrecht School of Economics.
    2. S. Rosenkranz & U. Weitzel, 2005. "Bargaining in Mergers: The Role of Outside Options and Termination Provisions," Working Papers 05-32, Utrecht School of Economics.
    3. Claudia M. Landeo & Kathryn E. Spier, 2016. "Stipulated Damages as a Rent-Extraction Mechanism: Experimental Evidence," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 172(2), pages 235-273, June.
    4. Yeon-Koo Che & Ian Gale, 1994. "Auctions with budget-constrained buyers: a nonequivalence result," Working Papers (Old Series) 9402, Federal Reserve Bank of Cleveland.
    5. Franziska Voelckner, 2006. "An empirical comparison of methods for measuring consumers’ willingness to pay," Marketing Letters, Springer, vol. 17(2), pages 137-149, April.
    6. Surajeet Chakravarty & W. Bentley MacLeod, 2006. "Construction Contracts (or “How to Get the Right Building at the Right Price?”)," CESifo Working Paper Series 1714, CESifo.
    7. Jeremy Bulow & Paul Klemperer, 1994. "Auctions vs. Negotiations," NBER Working Papers 4608, National Bureau of Economic Research, Inc.
    8. John McMillan, 2003. "Market Design: The Policy Uses of Theory," American Economic Review, American Economic Association, vol. 93(2), pages 139-144, May.
    9. Hitoshi Matsushima & Shunya Noda, 2020. "Mechanism Design with Blockchain Enforcement," DSSR Discussion Papers 111, Graduate School of Economics and Management, Tohoku University.
    10. Nicolas Gruyer & Nathalie Lenoir, 2003. "Auctioning airport slots (?)," Post-Print hal-01021718, HAL.
    11. Thomas D. Jeitschko, 1998. "Learning in Sequential Auctions," Southern Economic Journal, John Wiley & Sons, vol. 65(1), pages 98-112, July.
    12. Ravi Bapna & Chrysanthos Dellarocas & Sarah Rice, 2010. "Vertically Differentiated Simultaneous Vickrey Auctions: Theory and Experimental Evidence," Management Science, INFORMS, vol. 56(7), pages 1074-1092, July.
    13. Schmitz, Patrick W., 2003. "On second-price auctions and imperfect competition," Journal of Mathematical Economics, Elsevier, vol. 39(8), pages 901-909, November.
    14. Jinpeng Ma, 1997. "English Auctions and Walrasian Equilibria with Multiple Objects: a dynamic approach," Departmental Working Papers 199702, Rutgers University, Department of Economics.
    15. John McMillan & John Whalley & Zhu Li Jing, 1987. "Incentive Effects of Price Rises and Payment-System Changes on Chinese Agricultural Productivity Growth," NBER Working Papers 2148, National Bureau of Economic Research, Inc.
    16. Grigoriev, A. & Hiller, B. & Marban, S. & Vredeveld, T. & van der Zwaan, G.R.J., 2010. "Dynamic pricing problems with elastic demand," Research Memorandum 053, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
    17. François MARECHAL, 2003. "Should we base procurement rules on the competition of linear incentive contracts ?," Cahiers de Recherches Economiques du Département d'économie 03.07, Université de Lausanne, Faculté des HEC, Département d’économie.
    18. Yun-chien Chang, 2015. "An economic and comparative analysis of specificatio (the accession doctrine)," European Journal of Law and Economics, Springer, vol. 39(2), pages 225-243, April.
    19. Antonio Miralles, 2005. "Auction theory, sequential local service privatization, and the effects of geographical scale economies on effective competition," Working Papers in Economics 132, Universitat de Barcelona. Espai de Recerca en Economia.
    20. Ying-Ju Chen, 2017. "Optimal Dynamic Auctions for Display Advertising," Operations Research, INFORMS, vol. 65(4), pages 897-913, August.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ucp:jlstud:v:32:y:2003:p:121-151. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Journals Division (email available below). General contact details of provider: https://www.journals.uchicago.edu/JLS .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.