Reversible Rewards

American Law and Economics Review V15 N1 2012 (156–186)

31 Pages Posted: 27 Apr 2016

See all articles by Omri Ben-Shahar

Omri Ben-Shahar

University of Chicago Law School

Anu Bradford

Columbia University - Law School

Multiple version iconThere are 2 versions of this paper

Date Written: 2012

Abstract

This article offers a new mechanism of private enforcement, combining sanctions and rewards into a scheme of “reversible rewards.” The enforcing party sets up a precommitted fund and offers it as reward to another party to refrain from violation. If the violator turns down the reward, the enforcer can use the money in the fund for one purpose only—to pay for punishment of the violator. The article shows that this scheme doubles the effect of funds invested in enforcement and allows the enforcer to stop violations that would otherwise be too costly to deter. It argues that reversible rewards could be used to bolster the enforcement of rights in selective areas of private and international law and could also be applied strategically in litigation in contexts where compliance incentives are otherwise weak.

Keywords: reversible rewards, private law, international law

Suggested Citation

Ben-Shahar, Omri and Bradford, Anu, Reversible Rewards (2012). American Law and Economics Review V15 N1 2012 (156–186), Available at SSRN: https://ssrn.com/abstract=2770641

Omri Ben-Shahar

University of Chicago Law School ( email )

1111 E. 60th St.
Chicago, IL 60637
United States

Anu Bradford (Contact Author)

Columbia University - Law School ( email )

435 West 116th Street
New York, NY 10009

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