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Efficiency Of Equilibria Under Comparative Causation

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  • FRANCESCO PARISI

    (Department of Economics, Brown University Providence, RI 02906 USA)

  • Ram Singh

    (Department of Economics, Delhi School of Economics, Delhi, India)

Abstract

For past three decades or so, the negligence liability has been a major preoccupation of the economic analysis of liability rules. However, recently it has invited severe criticisms on several counts. Several leading legal scholars have championed a comparative causation based allocation of liability. According to these scholars, comparative causation based liability is more equitable than negligence liability. Moreover, some studies show that courts and juries are inclined toward comparative apportioning of liability. Nonetheless, implications of comparative causation based liability especially its eciency properties have remained under-explored. In this paper, we have studied the implications of comparative causation. We have shown that a mix of negligence and comparative causation liabilities can induce vigilant and equitable equitable equilibria, in which parties choose to be vigilant and accident loss is shared between them. However, comparative causation achieves equity at the cost of economic effciency.

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Bibliographic Info

Paper provided by Centre for Development Economics, Delhi School of Economics in its series Working papers with number 179.

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Length: 18 pages
Date of creation: Apr 2009
Date of revision:
Handle: RePEc:cde:cdewps:179

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  1. Hylton, Keith N., 2002. "An asymmetric-information model of litigation," International Review of Law and Economics, Elsevier, vol. 22(2), pages 153-175, August.
  2. Ram Singh, 2008. "On The Existence and Efficiency of Equilibria Under Liability Rules," Working Papers id:1716, eSocialSciences.
  3. Lando, Henrik, 1997. "An attempt to incorporate fairness into an economic model of tort law," International Review of Law and Economics, Elsevier, vol. 17(4), pages 575-587, December.
  4. Edlin, Aaron S., 1994. "Efficient standards of due care: Should courts find more parties negligent under comparative negligence?," International Review of Law and Economics, Elsevier, vol. 14(1), pages 21-34, March.
  5. A. Mitchell Polinsky & Yeon-Koo Che, 1991. "Decoupling Liability: Optimal Incentives for Care and Litigation," RAND Journal of Economics, The RAND Corporation, vol. 22(4), pages 562-570, Winter.
  6. Ram Singh & Allan M. Feldman, 2010. "Comparative Vigilance," Working Papers id:2682, eSocialSciences.
  7. Singh Ram, 2007. "Comparative Causation and Economic Efficiency: When Activity Levels are Constant," Review of Law & Economics, De Gruyter, vol. 3(2), pages 383-406, December.
  8. Rea, Samuel Jr., 1987. "The economics of comparative negligence," International Review of Law and Economics, Elsevier, vol. 7(2), pages 149-162, December.
  9. 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.
  10. Peter Van Wijck & Jan Winters, 2001. "The Principle of Full Compensation in Tort Law," European Journal of Law and Economics, Springer, vol. 11(3), pages 319-332, May.
  11. Miceli, Thomas J., 1997. "Economics of the Law: Torts, Contracts, Property, Litigation," OUP Catalogue, Oxford University Press, number 9780195103908.
  12. David Kaye & Mikel Aickin, 1984. "A Comment on Causal Apportionment," The Journal of Legal Studies, University of Chicago Press, vol. 13(1), pages 191-208, January.
  13. 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.
  14. Chung, Tai-Yeong, 1993. "Efficiency of Comparative Negligence: A Game Theoretic Analysis," The Journal of Legal Studies, University of Chicago Press, vol. 22(2), pages 395-404, June.
  15. Francesco Parisi, 2004. "Comparative Causation," American Law and Economics Review, Oxford University Press, vol. 6(2), pages 345-368.
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