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Nash Implementable Liability Rules for Judgement-Proof Injurers

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Author Info
Patrick González

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Abstract

I provide a complete characterization of Nash implementable allocations of spending in prevention by judgement-proof injurers. This characterization is used to identify the optimal rule that allows for the maximum total spending in prevention. The optimal rule amounts to apply the negligence rule to the “deep-pocket” (or the “victim”), that is the injurer who responds the most to monetary incentives under the strict liability rule, and the strict liability rule to everybody else.

Je développe une caractérisation complète des allocations de dépenses en prévention par des justiciables à la responsabilité limitée pouvant être mises en place en équilibre de Nash. Cette caractérisation est employée afin d'identifier la règle optimale permettant un maximum de dépenses en prévention. La règle optimale se résume à appliquer la règle de négligence au plus riche (le «deep-pocket» ou la «victime», selon l'interprétation), soit le justiciable qui répond le mieux aux incitations monétaires sous la règle de négligence, et la règle de responsabilité stricte à tous les autres.

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Paper provided by CIRANO in its series CIRANO Working Papers with number 2004s-58.

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Date of creation: 01 Nov 2004
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Handle: RePEc:cir:cirwor:2004s-58

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Related research
Keywords: negligence rule; limited liability; multiple injurers; Nash implementation; règle de négligence; responsabilité limitée; multiples justiciables; mise en place en équilibre de Nash;

Find related papers by JEL classification:
D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy-Making and Implementation
H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
K13 - Law and Economics - - Basic Areas of Law - - - Tort Law and Product Liability

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References listed on IDEAS
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  1. Kornhauser, Lewis A & Revesz, Richard L, 1994. "Multidefendant Settlements under Joint and Several Liability: The Problem of Insolvency," Journal of Legal Studies, University of Chicago Press, vol. 23(1), pages 517-42, January.
  2. Kornhauser, Lewis A & Revesz, Richard L, 1990. "Apportioning Damages among Potentially Insolvent Actors," Journal of Legal Studies, University of Chicago Press, vol. 19(2), pages 617-51, June.
  3. Emons, Winand & Sobel, Joel, 1991. "On the Effectiveness of Liability Rules when Agents Are Not Identical," Review of Economic Studies, Blackwell Publishing, vol. 58(2), pages 375-90, April. [Downloadable!] (restricted)
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  4. Steven Shavell, 2003. "Economic Analysis of Accident Law," NBER Working Papers 9694, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  5. Kornhauser, Lewis A. & Revesz, Richard L., 1989. "Apportioning Damages Among Potentially Insolvent Actors," Working Papers 89-22, C.V. Starr Center for Applied Economics, New York University. [Downloadable!]
  6. Bergstrom, Ted C. & Blume, Larry & Varian, Hal, 1992. "Uniqueness of Nash equilibrium in private provision of public goods : An improved proof," Journal of Public Economics, Elsevier, vol. 49(3), pages 391-392, December. [Downloadable!] (restricted)
  7. Bergstrom, Theodore & Blume, Lawrence & Varian, Hal, 1986. "On the private provision of public goods," Journal of Public Economics, Elsevier, vol. 29(1), pages 25-49, February. [Downloadable!] (restricted)
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