Behaviorally efficient remedies: An experiment
Abstract
Under common law, the standard remedy for breach of contract is expectation damages. Under continental law, the standard is specific performance. The common law solution is ex post efficient. But is it also ex ante efficient? We use experimental methods to test whether knowing that non-fulfilment will only give a right to damages deters mutually beneficial trade. The design excludes aversion against others willfully breaking their promises, and fairness concerns. We find that there is indeed less trade if specific performance is not guaranteed, provided the preference for the traded commodity is sufficiently pronounced.
Fields of Study & Subjects
Law
Economics
and Judicial Systems
Legal and Constitutional Studies
Legal principles and applications
Publication details
- Journal / source
- International Review of Law and Economics
- Publisher
- Elsevier BV
- Volume
- 85
- Pages
- 106321–106321
- Publication date
- 8 January 2026
- Language
- EN