The Questionable Efficiency of the Efficient-Breach Doctrine

The doctrine of efficient breach is based on the belief that the risk of postcontractual bargaining failure under property rules is greater than the risk of the courts' miscalculation of damages under liability rules. The article presents the findings of two experiments that challenge this belief and suggest that courts systematically undercompensate promisees. Implementation of the efficient-breach doctrine might therefore lead to underdeterrence and inefficiency.