http://repub.eur.nl/res/org/1293/ List of Publications en http://repub.eur.nl/static-eur/img/logo.png http://repub.eur.nl http://repub.eur.nl/res/pub/32809/ 2012-07-02T00:00:00Z De workshop Aansprakelijkheid en Verzekering van het Ius Commune congres 2011 had als overkoepelend thema ontwikkelingen in nieuwe vormen van immateriële schade. Een van de onderwerpen die hierbij genoemd werden, was schade door enkel tijdsverlies. Omdat art. 6:106 BW in beperkte vergoedbaarheid van immateriële schade resulteert, werd in de workshop onderzocht of het Nederlandse recht in dezen opener zou moeten worden. In de call for papers werden enkele vragen opgeworpen die, zeker vanuit rechtseconomisch gezichtspunt, erg interessant zijn. In deze bijdrage zal ik vanuit dat rechtseconomische perspectief drie van die vragen proberen te beantwoorden: Waarom zou zulke schade voor vergoeding in aanmerking moeten komen? Hoe kan zulke schade worden berekend? Bestaat er een spanning tussen het compenseren van zulke schade en het vermijden ervan? Visscher, L.T. http://repub.eur.nl/res/pub/31105/ 2012-01-15T00:00:00Z Vandenberghe, A.M.I.B. Visscher, L.T. http://repub.eur.nl/res/pub/34855/ 2011-08-31T00:00:00Z Abstract This chapter provides a general framework to analyze regulation with a law and economics approach. It introduces the volume “Regulation and Economics” of the second edition of the Encyclopedia of Law and Economics. This study intends to provide a state-of-the-art overview of regulatory economics. The editors review the traditional classifications and theories of social and economic regulation, emphasizing the limitations of these distinctions particularly in the perspective of the choice between liability and regulation. The chapter discusses both the public and the private interest theories of regulation and how they interact in various regulatory domains. The latter are divided in four categories: social regulation; regulation of public utilities; regulation of non-natural-monopolies, and regulation of professions. This introduction also summarizes the main findings of the 17 chapters on regulation included in the volume. The overall conclusion is that regulation involves a number of sector-specific issues. It is no longer possible to distinguish forms of regulation depending on the kind of market failure they are supposed to address, because in virtually every field regulation has to cope simultaneously with multiple market failures. The implication of this finding is twofold. On the one hand, the ability of regulation to effectively improve on market failure is impaired by the vested interests created by regulation. On the other hand, the actual outcomes of regulated markets depart significantly from the idealized world of perfect competition. The ‘Nirvana fallacy’ that still pervades the academic and the policy debate depends on the failure to acknowledge these circumstances. Pacces, A.M. Bergh, R.J. van den http://repub.eur.nl/res/pub/34943/ 2011-05-01T00:00:00Z Abstract: This paper is one chapter of the volume “Regulation and Economics” of the second edition of the Encyclopedia of Law and Economics. The authors review the economics of banking and financial markets and the regulatory response to market failure. Market failure in finance depends on problems of information and externalities. Regulation addresses these problems through conduct of business rules and prudential requirements. This approach has recently proved insufficient to prevent financial crises. Governments and central banks had to step in with massive safety nets in order to prevent financial meltdown. Although the appropriate regulatory response to the global financial crisis is still to be discovered, this chapter tries to draw a few lessons for financial regulation and supervision. First, prudential regulation and supervision should monitor, and possibly limit, competition between banks and non-banks in order to identify timely new sources of systemic risk. Second, financial stability policies need to strike a difficult balance between ex-ante strictness and ex-post leniency in order to deal with non-quantifiable risks. Moral hazard is not the only determinants of systemic instability; knightian uncertainty also determines instability by suddenly curtailing market and funding liquidity. Third, all financial institutions falling within the regulatory perimeter should have good corporate governance. However, what is good governance for non-financial firms is not necessarily efficient for financial firms due to the quality and quantity of externalities involved. Finally, because systemic externalities are cross-jurisdictional in modern financial markets, at least coordination among monetary and supervisory authorities of different countries is warranted. Pacces, A.M. Heremans, D. http://repub.eur.nl/res/pub/34944/ 2011-04-01T00:00:00Z Abstract. The corporate governance debate mainly deals with the effectiveness of techniques to protect shareholders from the controllers’ misbehaviour. This article takes a different approach. Focussing on self-dealing, it shows that effective strategies to protect investors from expropriation differ from country to country. However, some may be more efficient than others. The inefficiency of an effective discipline of self-dealing stems from the constraints it imposes on the discretion of controlling managers and shareholders. This article shows that both the US litigation-based model and the UK governance-based model are effective against expropriation, but their efficiency can be improved. In light of this, this article recommends restricting the influence of non-controlling shareholders to the selection of a minority of independent directors, whose task should be limited to monitoring and validating self-dealing. These findings can be extended from self-dealing to similar conflicts of interest that may lead to expropriation of shareholders, and to their regulation in other jurisdictions. Pacces, A.M. http://repub.eur.nl/res/pub/31466/ 2011-01-01T00:00:00Z Introduction A chapter on the methodology of law and economics, i.e. the economic analysis of law, concerns the methodology of economics. The above quote (Becker 1976, 5) shows that economics should not be defined by its subject, but by its method (also Veljanovski 2007, 19). This method forms the core of our contribution. We discuss several related issues. In his entry on methodology in the Encyclopedia of Law and Economics, Kerkmeester (2000) states that most legal economists follow a pragmatic, eclectic approach and that it is hard to fit them in a particular school. A review of the methodology of law and economics must therefore concentrate on the ideas which are shared by the vast majority of legal economists (Kerkmeester 2000, 383). De Geest defines the use of elements from different schools as the ‘integrated paradigm’, and the predominant approach to law and economics as the ‘mainstream approach’ (De Geest 1994, 459ff, Mackaay 1991, p. 1509). In law and economics, the economic approach operates on two distinct levels. First, human choice is analyzed from an economic point of view. The predominant approach here is the rational choice theory, which we discuss in Section 2. The basic idea of this theory is that human behaviour is analyzed as if people are seeking to maximize their expected utility. The second level of the economic approach is the goals which are attributed to the legal system. In Section 3, we discuss the concept of market failure, which in law and economics is regarded as the primary raison d’être of law. Legal rules are analyzed as instruments to correct market failure, or at least to reduce its adverse consequences. We will briefly illustrate this idea by discussing, among others, competition law, tort law, patent law and consumer law as instruments to counter market power, negative externalities, collective goods and information asymmetry. In Section 4, we discuss the Coase Theorem, which states that the allocation of legal entitlements between market players is irrelevant for efficiency when the parties can transact these entitlements costlessly. Given that transaction costs are positive in the real world, we also pay attention to their implications for regulation. In Section 5, we discuss ‘behavioural law and economics.’ This relatively recent approach is based on insights from cognitive psychology, suggesting that people do not always act rationally. After reviewing the major findings in this field, we elaborate on the consequences for the more traditional approach of the rational choice theory. In Section 6 we conclude. Pacces, A.M. Visscher, L.T. http://repub.eur.nl/res/pub/31470/ 2010-09-01T00:00:00Z Abstract Even though there exists an extensive Law and Economics literature on the topics of procedural law and harmonization of law, very little has been written on harmonization of procedural law as such. In this paper I first provide a brief overview of the economic approach to legal intervention, private enforcement and procedural law. Subsequently, I discuss the economics of harmonization of (substantive) private law. The traditional legal arguments in favor of harmonization (differences in legal rules between countries result in legal uncertainty and increased costs and therefore hinder cross-border trade, and harmonization would create a level playing field) turn out to be unconvincing. The economic analysis of law provides several arguments against harmonization (regulatory competition enables satisfying a larger number of preferences, it enables learning effects, (centralized) legislators suffer from limited information and the possible influence of interest groups should be taken into account) and in favor of it (the need to internalize interstate externalities, the desire to avoid a race to the bottom, decreasing transaction costs and profiting from economies of scale). These arguments have to be weighed in order to reach a conclusion on the desirability of harmonization Such a weighing shows that there is, at best, a limited scope for harmonization of procedural law (and then only as an additional option). Harmonization would remove the possible learning effects and does not allow satisfying a larger number of preferences. The possible arguments in favor of harmonization of procedural law seem week, especially now procedural law is closely connected to the underlying substantive law. The only potentially strong argument is the reduction of transaction costs. It is ultimately an empirical matter if this argument outweighs the arguments against harmonization. The 2008 Oxford Civil Justice Survey in my view suggests that this is not the case. Visscher, L.T. http://repub.eur.nl/res/pub/31474/ 2010-01-01T00:00:00Z Abstract: Even though there is general consensus that pain and suffering damages for personal injuries should primarily be based on the severity and duration of the impairment to health, the amounts granted differ greatly between and within countries. There is no legal framework to assess the correctness of the damages because a yardstick is lacking. The authors argue that the concept of Quality Adjusted Life Years (QALYs) from the field of health economics is able to provide the required framework. The primary legal objective of damages is to restore the victim as closely as possible to the position he would have been in without the accident. Besides compensation, satisfaction and prevention are also regularly mentioned as goals of pain and suffering damages. Whatever the goal, the authors’ view is that pain and suffering damages must be based on the impact of the health impairment on the victim. The concept of QALYs allows pain and suffering damages to be based on the impact of the health impairment. AQALYexpresses the value of living one year in a certain health condition. The health economics literature allows an assessment of the impact of different health conditions on quality of life. By subsequently monetizing QALYs, this impact is expressed in monetary terms, which provides a systematic basis for pain and suffering damages. The authors compare pain and suffering damages in several European countries with the amounts that would result from a conservative estimate of the monetary value of a QALY for specific types of personal injuries. They show that the amounts that are currently awarded are too low when compared to this assessment of the impact of the injury on quality of life. Karapanou, V. Visscher, L.T. http://repub.eur.nl/res/pub/31478/ 2010-01-01T00:00:00Z Introduction. In this chapter, we will provide an overview of the economic literature regarding cost shifting, fee arrangements and legal expense insurance. In the economic analysis of law, legal rules are regarded as instruments which can provide actors with behavioural incentives. In essence, private law (torts, contracts, property, etc.) allocates the costs which arise out of different activities. Those costs may only be borne by the party causing them if the party initially suff ering from them brings suit. Problems in fi nancing civil litigation may eff ectively hinder such lawsuits, so that the behavioural incentives which the law intends to provide do not reach the party causing the harm. ... etc. Visscher, L.T. Schepens, T. http://repub.eur.nl/res/pub/31596/ 2010-01-01T00:00:00Z Introduction. Civil litigation serves a multitude of goals, many of which were explicitly touched upon in the previous chapters. Civil litigation in the fi rst instance is a way of resolving confl icts. Depending on the type of confl ict at hand, the plaintiff for example may want the court to issue a declaration regarding the unlawfulness of the defendant’s behaviour, or he may want the defendant to restore the status quo ante, to refrain from further infringements, to perform his contractual duties, to compensate his losses, or to restitute illegitimate benefi ts. In essence, civil litigation is a way to realise rights and entitlements, without having to resort to vigilantism. In addition, civil litigation is a driving force behind legal development. The continuous fl ow of cases forces (or maybe better: enables) courts to fi nd new solutions for existing problems. An ever- changing society is confronted with confl icts which legislators cannot all foresee ex ante. However, the ex post character of civil litigation enables courts to seek solutions to the arisen issues. Tuil, M.L. Visscher, L.T. http://repub.eur.nl/res/pub/31597/ 2010-01-01T00:00:00Z Abstract The Law and Economics perspective on injunctive relief has been developed primarily from the Calabresi and Melamed (1972) distinction between property rules and liability rules, two different judicial means of enforcing legal rights. Their analysis is predicated on the assumption that, if the prevention of the unlawful activity by an injunction does not reach the efficient solution between the relevant parties, then the latter can modify the terms of the injunction by means of bilateral negotiation, drawing on Coase’s social basic analysis. The approach is particularly important once it is appreciated that legal entitlements are imperfectly formulated and that, in appropriate circumstances, legal wrongdoing can increase social welfare. For example, in areas where intellectual property rights are particularly difficult to formulate because of the high technology involved, too rigid an enforcement of those imperfectly targeted rights generates welfare losses. The task for economic analysis is then to determine whether injunctive relief or damages is preferable in the particular circumstances governing the parties’ activities. This largely involves comparing on the one hand the welfare losses which arise from imperfect damages award which arise predominantly where the court has high information costs in assessing the plaintiff’s losses (particularly where those losses are subjective and therefore cannot be determined by reference to market evaluation) or include irrecoverable third-party losses with, on the other hand, the transaction costs of negotiating a compromise solution or the welfare losses arising from a holdout (both conditions are likely where more than two parties are involved). One branch of the literature has added a new dimension to this analysis. It is concerned to explore how the choice of remedy ex post affects behaviour ex ante, in particular the propensity to invest. In addition, literature on optimal enforcement provides insights regarding the optimal timing of sanctions, which is relevant for the choice between injunctions (the first possible stage of legal intervention) and damages (the last possible stage). Ogus, A.I. Visscher, L.T. http://repub.eur.nl/res/pub/34945/ 2010-01-01T00:00:00Z Abstract This article analyzes the last financial crisis focussing on the recurrent dynamics of externalities in banking. It shows that two major determinants of the crisis were the uncertainty of a new form of financial intermediation and the failure of regulation to cope with its externalities. Differently from more standard explanations, which are based on opportunism and/or irrationality of financial institutions, this analysis suggests that regulation has not just been insufficient. Regulation has contributed to financial instability too, supporting fragile conventions to handle uncertainty and encouraging regulatory arbitrage through financial innovation. Three implications are derived from this analysis and contrasted with the ongoing reforms of financial regulation in the US and in the EU. First, regulatory arbitrage is better dealt with by protecting banking from disintermediation than by extending prudential regulation to non-banks. Maturity transformation should be defined functionally and reserved to banks. Second, a major danger with ratings is that they support false conventions of safety. To avoid this outcome, the relevance of ratings for regulatory purposes should be reduced and rating agencies should be deterred from rating without firm knowledge. Third, in order to reduce short-termism, regulation of banks’ corporate governance should rather question than reinforce managerial accountability to shareholders. Pacces, A.M. http://repub.eur.nl/res/pub/31598/ 2009-11-19T00:00:00Z Abstract In this paper we investigate the correct magnitude of pain and suffering damages for personal injuries. These damages differ greatly between and within countries, and the law of damages does not provide a framework to assess the correctness of the granted amounts. In our view, Law and Economics in combination with Health Economics is able to provide the required external framework. In the Law and Economics literature, a tension exists between the prevention theory (stating that the injurer should fully compensate non-pecuniary losses) and the insurance theory (stat-ing that the victim should not receive compensation for non-pecuniary losses, because he would not self-insure against these losses). We discuss the scarce literature that suggests a synthesis between these two theories: by basing damages on the amount that victims would spend in order to reduce the expected non-pecuniary accident losses, the injurer receives the correct incentives and the victim is not over-compensated. The Law and Economics litera-ture, however, lacks a framework to connect the magnitude of the damages to the injuries of the victim. The concept of Quality Adjusted Life Years (QALYs) from the domain of Health Economics can fill this gap. A QALY expresses the value of living one year in a certain health condition. By studying Health Economics literature, the impact of different health conditions on the quality of life may be assessed. By subsequently monetizing QALYs, this impact is expressed in monetary terms, thereby providing a non-arbitrary basis for pain and suffering damages. We compare the amounts granted in pain and suffering damages in several European coun-tries with the amounts that would result from a conservative estimation of the monetary value of a QALY for specific types of personal injuries. The conclusion is that the amounts that are currently awarded are (much) too low from a perspective of deterrence, but also from the more traditional legal compensation point of view. Karapanou, V. Visscher, L.T. http://repub.eur.nl/res/pub/31473/ 2009-05-20T00:00:00Z Introduction: In the European internal market consumers have a wide choice of products that become increasingly available through cross-border shopping. Sometimes sellers frustrate consumers‟ contractual expectations by delivering goods that are not of satisfactory quality. To guarantee a minimum level of consumer protection, EC Directive 1999/44 requires that goods must be in conformity with the contract of sale.1 This rule applies regardless of whether the seller behaved negligently. In cases of non conformity consumers have a choice of different remedies for breach of contract by the seller, such as repair or replacement or price reduction. The Directive has been presented as a significant step towards creating an internal consumer market, which would be impeded by fragmented and heterogeneous consumer protection rules. It may be followed in the future by further harmonization initiatives in the field of consumer sales law. From an economic perspective, two sets of questions arise. First, it may be asked whether legal intervention is necessary to guarantee quality in markets for consumer goods. The standard economic answer to this question is that legal rules may cure market failures, in particular problems of asymmetric information. However, any legal intervention must be justified by a benefit-cost analysis to enhance economic efficiency and avoid counterproductive effects. Consumer protection should be increased only up to the point where its marginal cost equals its marginal benefit. Moreover, market failures should not be replaced by government failures, which lead to outcomes that are worse than those of imperfect markets. Second, Law and Economics scholars have critically analyzed the question relating to the best level of government for designing regulatory responses to market failures. Should rules of consumer protection be enacted at the European level or should regulatory action be taken by the Member States? The economic analysis of federalism and regulatory competition provides several useful insights that are also relevant for discussing the desirability of harmonization of consumer sales law to further market integration. Bergh, R.J. van den Visscher, L.T. http://repub.eur.nl/res/pub/31467/ 2009-01-01T00:00:00Z Inleiding: Het onderwerp rechtshandhaving mag zich niet alleen in een grote juridische belangstelling verheugen, maar vormt ook in de rechtseconomie een hot topic. Rechtsregels, publiekrechtelijke en privaatrechtelijke, vormen in de economische visie instrumenten om diverse vormen van marktfalen te bestrijden. Hiermee worden uiteenlopende situaties bedoeld die resulteren in een lagere welvaart dan welke zonder het marktfalen zou zijn bereikt. Onvolledige informatie, bijvoorbeeld, kan er toe leiden dat een koper de kwaliteit van een mogelijk te kopen product niet nauwkeurig kan vaststellen. Als de producent en/of de verkoper betere informatie hebben, kunnen deze proberen gebruik te maken van de informatievoorsprong door een prijs te vragen die hoger is dan de kwaliteit rechtvaardigt. De potentiële koper kan vanwege dit risico afzien van de transactie, terwijl er ook situaties zijn waarin de kwaliteit van het product de prijs wel rechtvaardigt en alle betrokken partijen baat zouden hebben gehad bij de transactie. Het privaatrecht kan proberen de gevolgen van deze informatieongelijkheid te beperken, onder meer via het conformiteitsvereiste van art. 7:17 BW en door een informatieplicht op de verkoper te leggen. Ook kan de producent via het opbouwen van een goede merkreputatie signalen afgeven over de kwaliteit van zijn producten. In paragraaf 2 bespreek ik in het kort de vormen van marktfalen die voor dit boek van belang zijn. Het recht tracht gedragsprikkels aan actoren te verschaffen, om zo hun gedrag in de gewenste richting te sturen. Wil het recht deze functie kunnen vervullen, dan moeten rechtsregels worden gehandhaafd, omdat de gedragsprikkels anders illusoir blijven. Als een gedupeerde koper geen actie onderneemt tegen een malafide verkoper, dan ontvangt deze laatste geen gedragsprikkels uit het consumentenrecht. En als een fabrikant eventuele inbreuken op zijn merkenrecht niet goed kan bestrijden, dan verliest het merk zijn onderscheidend vermogen, zodat het niet langer een kwaliteitssignaal kan afgeven. In paragraaf 3 ga ik in op het onderwerp ‘optimal enforcement’, waarbij de relatieve voor- en nadelen van privaatrecht, bestuursrecht en strafrecht als handhavingsmechanisme aan de orde komen. Gezien het thema van dit boek zal ik hierbij de nadruk leggen op het privaatrecht. Vervolgens besteed ik aandacht aan het inzicht dat steeds rekening moet worden gehouden met de handhavingskosten, zodat niet moet worden gestreefd naar maximale maar naar optimale handhaving. Sommige normschendingen worden dus geaccepteerd, omdat het te duur is om ook deze schendingen tegen te gaan en/of omdat het te duur is om alle benodigde informatie te vergaren. Waar de focus in de centrale vraag uit de Inleiding van Engelhard bij de effectiviteit van de handhaving ligt, daar verschuift deze in de rechtseconomie dus naar de efficiëntie van de handhaving. In paragraaf 4 pas ik het geschetste kader toe op een aantal juridische deelterreinen die in dit boek worden besproken, te weten consumentenrecht, mededingingsrecht, sancties in het vermogensrecht en procesrecht. In paragraaf 5 kom ik tot mijn conclusies. Visscher, L.T. http://repub.eur.nl/res/pub/31477/ 2009-01-01T00:00:00Z Introduction: Many lawyers regard compensation as the most important goal of tort law. However, in the words of Williams, “this…does not look below the surface of things. Granted that the immediate object of the tort action is to compensate the plaintiff at the expense of the tortfeasor, why do we wish to do this?… An intelligent approach to the study of law must take account of its purpose, and must be prepared to test the law critically in the light of its purpose.”1 Keeton argues that the primary function of tort law is not to compensate the losses, but to determine when compensation is required.2 A similar argument is made by Fleming and Rogers.3 Losses of the victim are only shifted to the tortfeasor if there are reasons to do so. These reasons can be found in the goals of tort law. ... etc. Visscher, L.T. http://repub.eur.nl/res/pub/31471/ 2008-11-01T00:00:00Z Abstract: In many jurisdictions, potential injurers are under a legal duty to incorporate possible mistakes of the potential victim. I distinguish three types of mistakes. First, victims might make mistakes because it is too costly to avoid them (e.g. little children in traffic). Second, the actual care level of an actor might sometimes be a bit above, and sometimes a bit below his average care level. Third, people might choose a lower care level than is optimal for them, even though they were able to take optimal care. This is the type of mistake I analyze in this paper. I argue on the basis of a game theoretical analysis that the duty to incorporate such mistakes might frustrate the preventive goal of tort law, because it decreases the care incentives provided to the victim, while simultaneously increasing the care incentives for the injurer. I provide examples of the legal duty to incorporate possible mistakes of the victim from different legal systems. I discuss the doctrine of the Last Clear Chance, as well as Donald Wittmans idea of Marginal Cost Liability. In cases where this idea is not feasible, I argue that the defense of comparative negligence might be a good alternative. Visscher, L.T. http://repub.eur.nl/res/pub/13461/ 2008-03-10T00:00:00Z Given the threats of our current 'risk society', there is an ever-increasing demand for safety regulation to counter the harmful effects of an equally growing number of dangerous activities. Claims for more safety and security abound, ranging from concerns about people killed in traffic accidents and consumers harmed by unsafe products to anxiety about environmental disasters (global warming) and terrorism. This state of affairs poses difficult issues for policy makers. While government resources are necessarily limited, demands for safety and security are in principle without bounds. It is thus unavoidable that difficult choices must be made and priorities must be set. The Law and Economics literature has developed a comprehensive normative framework to prescribe optimal legal policies when individuals behave rationally. It is well established that enforcement agents should not aim at a minimum level of violations of legal norms but at an optimal level. The main goal of this paper is to apply the insights from the Law and Economics literature on optimal law enforcement to the area of safety regulation. Our paper distinguishes between the form of the sanctions (monetary versus non-monetary), the role of private parties versus public agents in enforcement (e.g. group actions), the timing of the enforcement measures (preclusion, act-based sanctions and harm-based sanctions) and the division of competencies between central enforcement authorities and decentralized enforcement agencies. Furthermore, we discuss several criticisms on the rational choice model (especially related to terrorism) and briefly discuss compliance strategies as alternative approach to deterrence strategies. Bergh, R.J. van den Visscher, L.T. http://repub.eur.nl/res/pub/31468/ 2008-02-21T00:00:00Z Abstract: In the economic analysis of tort law, scant attention is paid to justifications and excuses. An injurer invoking a justification argues that he did not act wrongfully. Excuses imply that the injurer acted wrongfully, but that his act cannot be imputed to him. If torts are described in general terms, on an abstract level, the possible role of justifications and excuses is larger than if the tort is subjectively defined. After all, the specific circumstances of the case that could lead to the conclusion that the injurer should not be liable are already incorporated in a subjectively defined tort, so that there is no separate function for justifications and excuses anymore. In this paper I argue that the use of general, abstract norms is preferable to applying subjective concrete norms. This generalization saves on administrative costs, it might lead to a better allocation of resources and it can provide better care and activity incentives. In circumstances where the objective norm would lead to undesirable outcomes, due to the specific circumstances of the case, justifications can serve as a correction. I analyze force majeure, necessity, necessary self-defense, legal duty or legal authority, authorized legal order, permission of the victim, assumption of risk and acting in the general interest. I argue that most, but not all, justifications make economic sense. In situations where the general norm provides correct incentives but where the specific injurer at hand would not change his behaviour as result of specific circumstances, excuses might avoid liability and hence save on administrative costs. I analyze mental or physical disability or illness, excusable error regarding the law or the facts, self-defense with excessive force and unauthorized official order. I conclude that most of the analyzed excuses are problematic from an economic point of view. Visscher, L.T. http://repub.eur.nl/res/pub/31472/ 2008-02-01T00:00:00Z Abstract: In this Chapter, I provide an overview of Law and Economics literature regarding tort damages. Where necessary, attention is also spent to rules of tort liability. Both types of rules provide behavioral incentives to both injurers and victims, with respect to their level of care and activity. Moreover, they determine who is the residual risk bearer. Many topics determine who ultimately bears which risks, among which the applicable liability rule (strict liability or negligence), the question which losses are included in the damages and which are excluded, the issue whether punitive damages are possible, how future losses, damages for nonpecuniary losses and fatal accidents are calculated, and how the topic of multiple tortfeasors is dealt with. Finally, empirical research regarding tort damages is briefly touched upon. The Chapter is followed by an extensive bibliography. Visscher, L.T.