The Mistaken Improver Problem
Posted: 13 Aug 1998
The mistaken improver problem occurs when an individual improves a piece of land owned by another. This paper derives the condition under which a potential improver should invest in a costly survey to determine ownership prior to making irreversible investments. It then examines whether legal remedies available to owners and improvers can be structured to induce improvers to make the efficient survey decision. The paper concludes by showing that the efficient remedies do not create an incentive for improvers to make "intentional" mistakes in an effort to "bypass" the market.
JEL Classification: H41, R11
Suggested Citation: Suggested Citation