Fee Shifting and Incentives to Comply with the Law

Law and economics is a top-heavy discipline, in the sense that it is largely theoretical. Empirical tests of its claims have been carried out only recently, and a great deal remains to be done. The larger part of the recent wave of empirical law and economics research, however, examines the litigation process. This research has focused on the frequencies with which lawsuits are brought and with which they are settled.1 Surprisingly, empirical researchers2 have given little attention to the theoretical literature that makes predictions concerning incentives to comply with legal rules and the optimality of compliance equilibria.3 This lack of attention is disappointing because compliance theory has a greater claim to being core, or central, to the law and economics literature than does litigation theory