in statutory law as guidance for potential litigants and judges alike. At the same time, the law should be clear that judicial review will not be limited to these typified cases Incompleteness of law and the allocation of LmLEP In this part of the essay we explain the core elements of the incomplete law theory we use as a framework to determine the optimal allocation of lmlEp for handling cases related to the proper governance of corporations A. Incompleteness of lay If law were complete if a law could stipulate unambiguously all contingencies, it could fully deter harmful actions, including actions that may result in the violation of fiduciary duties. The key task for such a law would be to stipulate the appropriate level of punishment and to ensure that the probability of detection sufficiently high. Indeed, much of the traditional literature on law enforcement ( Becker 1968; Polinsky and Shavell 2000; Stigler 1964)focuses on these variables and treats law implicitly as complete. By contrast, if law is incomplete, law cannot effectively deter. In this second best world, legal systems need to allocate LMLEP to deal with future contingencies that were unanticipated at the time law was made, in order to enhance(not to perfect) the effectiveness of law enforcement. Absent the allocation of LMLEP, many actions will not be sanctioned, even if they result in substantial harm. Legislative change may make law more complete after assembling suggested in the rules vs standards literature. See Kaplow(1992) and Kaplow(1995). However, even the most ambitious lawmaker would not be able to write a fully complete law8 in statutory law as guidance for potential litigants and judges alike. At the same time, the law should be clear that judicial review will not be limited to these typified cases. I: Incompleteness of Law and the Allocation of LMLEP In this part of the essay we explain the core elements of the incomplete law theory we use as a framework to determine the optimal allocation of LMLEP for handling cases related to the proper governance of corporations.5 A. Incompleteness of Law If law were complete – if a law could stipulate unambiguously all future contingencies, it could fully deter harmful actions, including actions that may result in the violation of fiduciary duties. The key task for such a law would be to stipulate the appropriate level of punishment and to ensure that the probability of detection is sufficiently high. Indeed, much of the traditional literature on law enforcement (Becker 1968; Polinsky and Shavell 2000; Stigler 1964) focuses on these variables and treats law implicitly as complete. By contrast, if law is incomplete, law cannot effectively deter. In this second best world, legal systems need to allocate LMLEP to deal with future contingencies that were unanticipated at the time law was made, in order to enhance (not to perfect) the effectiveness of law enforcement. Absent the allocation of LMLEP, many actions will not be sanctioned, even if they result in substantial harm. Legislative change may make law more complete after assembling suggested in the rules vs. standards literature. See Kaplow (1992) and Kaplow (1995). However, even the most ambitious lawmaker would not be able to write a fully complete law