Towards an Optimal Regulator: Assessment of the EU Artificial Intelligence Act

The previous discussion on generative AI agents and the extrapolation of the main findings of the law and economics literature upon such generative AI agents suggests that lawmakers are facing an unprecedented challenge of how to simultaneously regulate potential harmful and hazardous activity and how to keep incentives to innovate undistorted. This chapter attempts to offer a set of law and economics informed principles that might mitigate the identified shortcomings of the current human-centred tort law system. Moreover, this section offers a set of law and economics recommendations for an improved regulatory intervention which should deter judgement-proof generative AI agent’s related hazards, induce optimal precaution and simultaneously preserve dynamic efficiency—incentives to innovate undistorted. Finally, it offers suggestion on the improvement of regulatory approaches employed in the recently enacted EU Artificial Intelligence Act.