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ABSTRACT:
Recent scholarship claims that the increasing use of innovative judgment proofing techniques in business transactions inevitably will cause "the death of liability." I refute these claims by creating a model that separates arm's length judgment proofing transactions from non-arm's length transactions based on the different motivations inherent in each. The model uses behavioral economics to show that arm's length judgment proofing transactions, which occur between unrelated companies, are so risky and difficult to structure that they would be inherently irrational. Although related companies might have greater motivation to engage in (non-arm's length) judgment proofing transactions, those types of transactions are not innovative and have long been regulated by law.
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