On a Comprehensive Set of the Damage Measures Inducing Optimality and Voluntary Participation
Abstract: We design a damage measure through which courts can elicit not only socially optimal behavior but also voluntary participation from contracting parties. Although a rich body of existing literature examined the optimality of specific damage measures, a universal testing standard has yet to be offered. Further, existing studies tend not to consider explicitly voluntary participation conditions. We attempt to fill the gap by a new measure, i.e., ‘optimal damages’ (OD) satisfying the full list of such conditions. Constituting a comprehensive set of optimal damage measures, OD is subsequently utilized to re-examine, in a fairly unified manner, the optimality of the measures widely discussed so far; some results contrary to the prevailing understanding are confirmed. OD can also be used to analyze new types of measures, and in fact allows for portraying numerous damage measures in terms of systematic ‘set-relationships.’ Finally, from analytical and practical perspectives, we highlight the potential merits that OD-related tasks will bring forth for ensuing studies in this area of substantive law.
