Over the last decade there has been substantial progress in understanding the role and functions of law through the economic analysis of legal rules. Especially in the areas of contractual relations and torts, theoretical modelling under various conditions of information and uncertainty has added to our knowledge about the effects and potential effects of differing rule structures, sanctioning systems, and regulatory regimes. Dr. Shavell has been a leading scholar studying such problems. In this project, Dr. Shavell continues that work through focusing on three different topics. The first two, which relate to contract law, address (1) rules governing disclosure of information at the time of contracting, and (2) rules governing a party's ability to withdraw an offer after the party to whom the offer has been made has relied on the offer by gathering information about the offer's value. The final topic addresses (3) rules governing a corporate employee's personal liability for torts or crimes committed by the corporation. Each of these topics frames issues of theoretical and practical importance for law. Also, the work being pursued models situations with increased realism. While there are already models to analyze sellers' incentives to disclose information, none has studied the effects of ordinary contract law. Similarly, there has been no rigorous economic analysis of contract law dealing with offer and acceptance. Finally, while there are models of deterrence generally, Dr. Shavell adds important realism by conceptualizing a business firm as a bundle of actors (each with their own private incentives) rather than as a single unified actor. This attention to law and to operational context is important in its own right and in opening up lines of research for others to follow.
