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Comparative Vigilance

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Abstract

A growing body of literature suggests that courts and juries are inclined toward division of liability between two strictly non-negligent or “vigilant” parties. However, standard models of liability rules do not provide for vigilance-based sharing of liability. In this paper, we explore the economic efficiency of liability rules based on comparative vigilance. We devise liability rules that are efficient and that reward vigilance exhibited by the parties. It is commonly believed that discontinuous liability shares are necessary for efficiency, but we develop a liability rule that is both efficient and continuous, based on comparative negligence when both parties are negligent and on comparative vigilance when both parties are vigilant. Moreover, our rule divides accident losses into two parts: one part creates incentives for efficiency; the other part provides equity.

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File URL: http://www.brown.edu/Departments/Economics/Papers/2008/2008-9_paper.pdf
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Bibliographic Info

Paper provided by Brown University, Department of Economics in its series Working Papers with number 2008-9.

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Date of creation: 2008
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Handle: RePEc:bro:econwp:2008-9

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Postal: Department of Economics, Brown University, Providence, RI 02912

Related research

Keywords: Comparative vigilance; equity; economic efficiency; tort liability rules; Nash equilibrium; social costs; pure comparative vigilance; super-symmetric rule;

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References

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  1. Ram Singh, 2006. "On the Existence and Efficiency of Equilibria under Liability Rules," Working papers 150, Centre for Development Economics, Delhi School of Economics.
  2. Miceli, Thomas J., 1997. "Economics of the Law: Torts, Contracts, Property, Litigation," OUP Catalogue, Oxford University Press, number 9780195103908.
  3. Kahan, Marcel, 1989. "Causation and Incentives to Take Care under the Negligence Rule," The Journal of Legal Studies, University of Chicago Press, vol. 18(2), pages 427-47, June.
  4. Feldman, Allan M. & Frost, John M., 1998. "A simple model of efficient tort liability rules," International Review of Law and Economics, Elsevier, vol. 18(2), pages 201-215, June.
  5. Allan M Feldman & Ram Singh, 2008. "Comparative Vigilance," Working Papers 2008-9, Brown University, Department of Economics.
  6. Kim, Jeonghyun & Feldman, Allan M., 2006. "Victim or injurer, small car or SUV: Tort liability rules under role-type uncertainty," International Review of Law and Economics, Elsevier, vol. 26(4), pages 455-477, December.
  7. Rea, Samuel Jr., 1987. "The economics of comparative negligence," International Review of Law and Economics, Elsevier, vol. 7(2), pages 149-162, December.
  8. Francesco Parisi, 2004. "Comparative Causation," American Law and Economics Review, Oxford University Press, vol. 6(2), pages 345-368.
  9. Allan M. Feldman & Jeonghyun Kim, 2005. "The Hand Rule and United States v. Carroll Towing Co. Reconsidered," American Law and Economics Review, Oxford University Press, vol. 7(2), pages 523-543.
  10. Marks, Stephen, 1994. "Discontinuities, Causation, and Grady's Uncertainty Theorem," The Journal of Legal Studies, University of Chicago Press, vol. 23(1), pages 287-301, January.
  11. P. A. Diamond, 1973. "Single Activity Accidents," Working papers 113, Massachusetts Institute of Technology (MIT), Department of Economics.
  12. Kaplow, Louis, 1995. "A Model of the Optimal Complexity of Legal Rules," Journal of Law, Economics and Organization, Oxford University Press, vol. 11(1), pages 150-63, April.
  13. Lowe, Vaughan, 2007. "International Law," OUP Catalogue, Oxford University Press, number 9780199268849.
  14. Allan M. Feldman & Jeonghyun Kim, 2002. "The Hand Rule and United States v. Carroll Towing Co. Reconsidered," Working Papers 2002-27, Brown University, Department of Economics.
  15. Oren Bar-Gill & Omri Ben-Shahar, 2003. "The Uneasy Case for Comparative Negligence," American Law and Economics Review, Oxford University Press, vol. 5(2), pages 433-469, August.
  16. Miceli, Thomas J., 1996. "Cause in fact, proximate cause, and the hand rule: Extending Grady's positive economic theory of negligence," International Review of Law and Economics, Elsevier, vol. 16(4), pages 473-482, December.
  17. Jeonghyun Kim, 2004. "A Complete Characterization of Efficient Liability Rules: Comment," Journal of Economics, Springer, vol. 81(1), pages 61-75, 01.
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Citations

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Cited by:
  1. Ram Singh, 2009. "Comparative Vigilance," American Law and Economics Review, Oxford University Press, vol. 11(1), pages 134-161.
  2. FRANCESCO PARISI & Ram Singh, 2009. "Efficiency Of Equilibria Under Comparative Causation," Working papers 179, Centre for Development Economics, Delhi School of Economics.
  3. Parisi Francesco & Singh Ram, 2010. "The Efficiency of Comparative Causation," Review of Law & Economics, De Gruyter, vol. 6(2), pages 219-245, September.
  4. Allan M Feldman & Ram Singh, 2008. "Comparative Vigilance: a Simple Guide," Working Papers 2008-11, Brown University, Department of Economics.

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