Summary

This chapter contributes to the literature on legal transition by offering a perspective on the “attenuation policy.” The attenuation policy invites the lawmaker to adjust its decisions to the contingent status of the parties, which might be favorable (high benefits/low costs) or unfavorable (small benefits/high costs). The attenuation policy provides parties with insurance, with a negligible impact on efficiency. The chapter puts the attenuation policy in perspective and compares it to other transition tools.

Abstract

This article compares the classic liability rules, negligence and strict liability, under the hypothesis that injurers and victims formulate subjective beliefs about the probabilities of harm. Parties may reasonably disagree in their assessment of the precautionary measures available: a measure regarded as safe by one party may be regarded as not safe by the other. By relying on the notions of Pareto efficiency and “No Betting” Pareto efficiency, the article shows that negligence is the optimal liability rule when injurers believe that the probability of harm is always higher than the victims do, while strict liability with overcompensatory damages is the optimal rule in the opposite case. The same results apply to bilateral accidents and, specifically, to product-related harms in competitive markets. Overcompensatory (“punitive”) damages provide consumers with insurance against their own pessimism.

Abstract

This paper investigates the case in which the benefits and the costs of prevention are subject to uncertainty. Prevention measures are taken after uncertainty has unraveled. The conventional policy prescribes that prevention measures are taken up to the point in which the realized marginal cost of prevention is equal to the realized marginal benefit (measured in terms of the Value of Statistical Lives saved). This policy imposes costly uncertainty on imperfectly insured parties. The optimal ex-ante policy mitigates this uncertainty. It deviates from the conventional policy by prescribing less prevention in those contingencies in which risk-preventers face high compliance costs and victims face a high probability of injury, and higher prevention in the opposite case. The optimal ex-ante policy supports the use of a VSL measure constant across contingencies. It dilutes the “dead-anyway” effect and it responds to the risk-preventers’ level of prudence.

Abstract

Tax evasion is still widespread around the world, among the most advanced countries too. Its level in Italy is comparatively very high, as it is commonly recognized. This essay offers a broad non-technical outline of the main topics concerning tax evasion, from the economist’s point of view. The first section introduces the paper, summarizes its main contents, and depicts the basic conclusions and suggestions. The second section is devoted to a critical survey of existing empirical estimates on evasion magnitude, both in Italy and in other Western countries. Some figures on tax evasion consequences in Italy are then briefly discussed. The third section focuses on individuals’ decision to evade, inside the framework built on the classical grounds of Allingham-Sandmo’s (A/S) model. It scrutinizes A/S model’s hypotheses and implications and finally introduces some other factors which may prove relevant for the decision to evade taxes. According to this framework, the fourth section analytically derives the main properties of new audit procedures, recently adopted or proposed in Italy

NOTE: The paper is in Italian.