The mistaken improver problem

The mistaken improver problem occurs when an individual improves a piece of land owned by another. This paper derives the condition under which a pote ntial improver should invest in a costly survey to determine ownership prio r to making irreversible investments. It then examines whether legal remedi es available to owners and improvers can be structured to induce improvers to make the efficient survey decision. The paper concludes by showing that the efficient remedies do not create an incentive for improvers to make "in tentional" mistakes in an effort to "bypass" the market. (C) 1999 Academic Press.