Liability insurance under the negligence rule
AbstractWe incorporate the concept of evidentiary standard to the analysis of the negligence rule under liability insurance and court errors. When the postaccident evidence is privately contractible and not too noisy, efficiency is achieved by both strict liability and a negligence rule with appropriate due care and evidentiary standards. When the evidence is not directly contractible, trial outcomes represent useful contractible information for the risk-incentives tradeoff in the liability insurance policy. Strict liability is then inefficient and dominated by the negligence rule. The negligence rule can itself be improved upon by decoupling damages from the harm suffered by the victim. Copyright (c) 2009, RAND..
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Bibliographic InfoArticle provided by RAND Corporation in its journal The RAND Journal of Economics.
Volume (Year): 40 (2009)
Issue (Month): 3 ()
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Other versions of this item:
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- K41 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Litigation Process
- K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
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