AbstractA 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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Bibliographic InfoPaper provided by Brown University, Department of Economics in its series Working Papers with number 2008-9.
Date of creation: 2008
Date of revision:
Contact details of provider:
Postal: Department of Economics, Brown University, Providence, RI 02912
Comparative vigilance; equity; economic efficiency; tort liability rules; Nash equilibrium; social costs; pure comparative vigilance; super-symmetric rule;
Other versions of this item:
- K13 - Law and Economics - - Basic Areas of Law - - - Tort Law and Product Liability; Forensic Economics
- D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-10-21 (All new papers)
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