ABSTRACT
This chapter examines the pervasiveness in law of "threshold rules", or rules that condition the imposition of a legal sanction on whether or not a person has met a threshold, or standard of behavior. When properly structured, these rules provide an ingenious solution to the sort of bilateral incentive problems that commonly arise in the context of legal disputes. These represent situations in which the two parties to a potential dispute both have the ability to take steps to reduce the likelihood of its occurrence, for example by investing in care. An important function of the governing legal rule in such settings is to provide incentives for the parties to undertake those steps in an efficient manner, and the chapter shows that threshold rules can achieve precisely that result. The chapter further demonstrates this conclusion in the context of tort law, and then provides examples from other areas of the law to illustrate the generality of the result.
