Dual-Chooser Rules

Ian Ayres

in Optional Law

Published by University of Chicago Press

Published in print June 2005 | ISBN: 9780226033464
Published online February 2013 | e-ISBN: 9780226033488 | DOI:
Dual-Chooser Rules

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Beyond put options there are a dizzying array of “Pay or Be Paid” and “Pay or Pay” rules. But our understanding of liability rules is simultaneously simplified since it is shown that this double infinity of rules gives rise to just two potential allocations: plaintiff-choice allocations (which delegate allocative authority solely to the plaintiff) and defendant-choice allocations (which delegate allocative authority solely to the defendant). This chapter shows that there are two further foundational ways for courts to use liability rules to delegate allocative authority. These are “dual-chooser” rules in contradistinction to the single-chooser rules, because both the plaintiff and the defendant have a potential impact on how the entitlement is ultimately allocated. One class of allocation rules, known as “plaintiff-presumption” dual-chooser rules, presumptively allocates the entitlement to the plaintiff unless both parties opt to shift it (for a court-determined price) to the defendant. The other class of allocations are the “defendant-presumption” dual-chooser rules, which concern rules that presumptively allocate the legal entitlement to the defendant unless both parties opt to shift it to the plaintiff.

Keywords: plaintiff-choice allocations; defendant-choice allocations; liability rules; dual-chooser rules; allocative authority; plaintiff; defendant; legal entitlement

Chapter.  6792 words.  Illustrated.

Subjects: Econometrics and Mathematical Economics

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