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Liability rules can rationalize greater victim vulnerability

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  • Tim Friehe
  • Avraham Tabbach

Abstract

This paper shows that an imperfect strict liability rule can induce victims to increase the losses they incur in the event of an accident, and that similar incentives exist under the negligence rule. Using a simple model in which victims can influence their harm distribution, we identify two potential reasons why victims may benefit from greater ‘vulnerability’, namely strategic effects on own future and others’ behaviour.

Suggested Citation

  • Tim Friehe & Avraham Tabbach, 2021. "Liability rules can rationalize greater victim vulnerability," Applied Economics Letters, Taylor & Francis Journals, vol. 28(21), pages 1825-1829, December.
    • Handle: RePEc:taf:apeclt:v:28:y:2021:i:21:p:1825-1829
    DOI: 10.1080/13504851.2020.1854440
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