century. Statutory and case law by that time had well specified the meaning of theft of assets and the conditions for holding someone liable for deceit. Increasingly, however, objects such as electricity, ideas, and telephone lines became subject of appropriation that differed from cases for which the law had been designed Similarly, the legal principles governing fraud and deceit were developed for cases where asymmetry between the parties was limited and the truth of the matter was easy to verify. With the growth of markets for financial instruments, the asymmetry of information between seller and buyer increased, as did the value of information Someone with the power to change and adapt law had to decide whether existing legal principles that had been developed with different cases in mind should be used to resolve these cases, or whether different principles were needed, and if so, stipulate such principles Given the incompleteness of law, a crucial question is who should hold the power to interpret or make new law in the future and to resolve questions about the application of existing law to new cases. Unlike contracts, where the parties to the original contract or their assignees have the power to renegotiate, for law the question who holds residual lawmaking power is less obvious. Thus, legal systems must allocate these rights. In doing so, legal systems must address two questions: who should hold these rights in order to ensure effective law enforcement. and what factors should be considered in allocating these rights to different agents The notion that law is ambiguous or indeterminate-concepts that are close to our term"incompleteness-has long been recognized in the legal literature(Hart 1961 Solum 1999). In addition, a substantial literature has analyzed the optimal choice between standards and rules(Kaplow 1992; Kaplow 1995; Kaplow 1997). Thus, the corporations. In fact, some jurisdictions, including Delaware, do not distinguish among these two type10 century. Statutory and case law by that time had well specified the meaning of theft of assets and the conditions for holding someone liable for deceit. Increasingly, however, objects such as electricity, ideas, and telephone lines became subject of appropriation that differed from cases for which the law had been designed. Similarly, the legal principles governing fraud and deceit were developed for cases where asymmetry between the parties was limited and the truth of the matter was easy to verify. With the growth of markets for financial instruments, the asymmetry of information between seller and buyer increased, as did the value of information. Someone with the power to change and adapt law had to decide whether existing legal principles that had been developed with different cases in mind should be used to resolve these cases, or whether different principles were needed, and if so, stipulate such principles. Given the incompleteness of law, a crucial question is who should hold the power to interpret or make new law in the future and to resolve questions about the application of existing law to new cases. Unlike contracts, where the parties to the original contract or their assignees have the power to renegotiate, for law the question who holds residual lawmaking power is less obvious. Thus, legal systems must allocate these rights. In doing so, legal systems must address two questions: who should hold these rights in order to ensure effective law enforcement, and what factors should be considered in allocating these rights to different agents. The notion that law is ambiguous or indeterminate – concepts that are close to our term “incompleteness” – has long been recognized in the legal literature (Hart 1961; Solum 1999). In addition, a substantial literature has analyzed the optimal choice between standards and rules (Kaplow 1992; Kaplow 1995; Kaplow 1997). Thus, the corporations. In fact, some jurisdictions, including Delaware, do not distinguish among these two type