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Screening accident victims

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Author Info
Friehe, Tim

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Abstract

This paper considers victim heterogeneity in harm levels in a bilateral-care model, where harm is private information. In practice, resources are expended on the verification of damages suffered. We establish a sufficient condition for the possibility to accurately deduce the harm level from the observable care choice without spending on verification. For cases in which this condition does not hold, this paper sets out a simple screening mechanism that induces victims to reveal their type truthfully and induces optimal care in equilibrium without verification costs.

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File URL: http://www.sciencedirect.com/science/article/B6V7M-4VXB720-1/2/1190372465e6ca3d9b294de318bbc6fb
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Publisher Info
Article provided by Elsevier in its journal International Review of Law and Economics.

Volume (Year): 29 (2009)
Issue (Month): 3 (September)
Pages: 272-280
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Handle: RePEc:eee:irlaec:v:29:y:2009:i:3:p:272-280

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Web page: http://www.elsevier.com/locate/irle

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Related research
Keywords: Bilateral care Incentives Heterogeneous victims Information asymmetry;

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This page was last updated on 2009-12-3.


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