Efficiency property of liability rules when courts make errors in estimation of the harm suffered by the victim is studied. Effects of courts' errors on parties' behaviour regarding the levels of care they take to prevent the accident and their decisions to buy information about courts' errors are analyzed. A condition called negligent injurer's liability is introduced. When courts make upper-biased errors, condition negligent injurer's liability is shown to be necessary and sufficient for a simple liability rule to motivate the parties to take efficient care and simultaneously not to spend on information. The notion of simple liability rules is also introduced. Analysis is carried out in a quite broader framework. In particular, the standard assumption that costs of care and expected loss functions are such that total costs of accident are minimized at a unique configuration of care levels is relaxed.
Download Info
To download:
If you experience problems downloading a file, check if you have the
proper application to
view it first. Information about this may be contained
in the File-Format links below. In case of further problems read
the IDEAS help
page. Note that these files are not on the IDEAS
site. Please be patient as the files may be large.
Publisher Info
Paper provided by Centre for Development Economics, Delhi School of Economics in its series Working papers with number
97.
Find related papers by JEL classification: K13 - Law and Economics - - Basic Areas of Law - - - Tort Law and Product Liability
References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.: