On Liability and Insurance
AbstractThe question considered in this article is how liability rules and insurance affect incentives to reduce accident risks and the allocation of such risks. This question is examined when liability is strict or based on the negligence rule; and, if first-party and liability insurance are available, when insurers have information about insured parties' behavior and when they do not have such information. The conclusions are in essence that although both of the forms of liability create incentives to take care, they differ in respect to the allocation of risk; that, of course, the presence of insurance markets mitigates this difference and alters incentives to take care; and that despite the latter effect, the sale of insurance is socially desirable.
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Bibliographic InfoArticle provided by The RAND Corporation in its journal Bell Journal of Economics.
Volume (Year): 13 (1982)
Issue (Month): 1 (Spring)
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- Ralph A. Winter, 1991. "The Liability Insurance Market," Journal of Economic Perspectives, American Economic Association, vol. 5(3), pages 115-136, Summer.
- Gérard Mondello, 2012.
"The Equivalence of Strict Liability and Negligence Rule: A « Trompe l'œil » Perspective,"
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University of Chicago Press, vol. 47(2), pages 357-93, October.
- Alma Cohen & Rajeev Dehejia, 2003. "The Effect of Automobile Insurance and Accident Liability Laws in Traffic Fatalities," NBER Working Papers 9602, National Bureau of Economic Research, Inc.
- Kazuhiko Sakai & Mahito Okura, 2012. "An Economic Analysis of Compulsory and Voluntary Insurance," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 2(2), pages 1-8, April.
- Mondello, Gérard, 2012. "La responsabilité environnementale des prêteurs : difficultés juridiques et ensemble des possibles," L'Actualité Economique, Société Canadienne de Science Economique, vol. 88(2), pages 257-278, Juin.
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