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The Equivalence of Strict Liability and Negligence Rule: A " Trompe l'œil " Perspective

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  • Gérard Mondello

    (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - CNRS : UMR7321 - Université de Nice Sophia Antipolis (UNS))

Abstract

This paper analyzes the difficulties of comparing the respective effectiveness of two among the most important liability regimes in tort law: rule of negligence and strict liability. Starting from the standard Shavellian unilateral accident scheme, I show that matching up liability regime on their capacity to provide the highest level of safety is ineffective. This demonstration lies on two components. The first one gathers some results drawn from literature that introduces uncertainty. The second one takes into consideration the beliefs of agents and their aversion to ambiguity. The model applies uncertainty to the level of maximum damage. This demonstration reinforces the previous result. Hence, both regimes apply on specific tort question and comparing their individual efficiency needs to call for other components as the transaction costs associated to the burden of evidence, the fairness between victims and injurers, etc.

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Paper provided by HAL in its series Post-Print with number hal-00727223.

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Date of creation: 01 Aug 2012
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Handle: RePEc:hal:journl:hal-00727223

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Keywords: Strict Liability; Negligence Rule; Ambiguity Theory; Uncertainty; Accident Model;

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  1. Steven Shavell, 1983. "Uncertainty Over Causation and the Determination of Civil Liability," NBER Working Papers 1219, National Bureau of Economic Research, Inc.
  2. Segerson, Kathleen & Tietenberg, Tom, 1992. "The structure of penalties in environmental enforcement: An economic analysis," Journal of Environmental Economics and Management, Elsevier, vol. 23(2), pages 179-200, September.
  3. Grant, Simon & Chateauneuf, A. & Eichberger, J., 2002. "Choice under Uncertainty with the Best and Worst in Mind: Neo-additive Capacities," Working Papers 2002-10, Rice University, Department of Economics.
  4. Mattiacci, Giuseppe Dari & Parisi, Francesco, 2003. "The cost of delegated control: vicarious liability, secondary liability and mandatory insurance," International Review of Law and Economics, Elsevier, vol. 23(4), pages 453-475, December.
  5. Shavell, Steven, 1987. "The Optimal Use of Nonmonetary Sanctions as a Deterrent," American Economic Review, American Economic Association, vol. 77(4), pages 584-92, September.
  6. Camerer, Colin & Weber, Martin, 1992. " Recent Developments in Modeling Preferences: Uncertainty and Ambiguity," Journal of Risk and Uncertainty, Springer, vol. 5(4), pages 325-70, October.
  7. Demougin, Dominique & Fluet, Claude, 2001. "Monitoring versus incentives," European Economic Review, Elsevier, vol. 45(9), pages 1741-1764, October.
  8. Joshua C. Teitelbaum, 2007. "A Unilateral Accident Model under Ambiguity," The Journal of Legal Studies, University of Chicago Press, vol. 36(2), pages 431-477, 06.
  9. Schmitz, Patrick W., 2000. "On the Joint Use of Liability and Safety Regulation," MPRA Paper 12536, University Library of Munich, Germany.
  10. Mohammed Abdellaoui, 2000. "Parameter-Free Elicitation of Utility and Probability Weighting Functions," Management Science, INFORMS, vol. 46(11), pages 1497-1512, November.
  11. Steven Shavell, 1984. "A Model of the Optimal Use of Liability and Safety Regulation," RAND Journal of Economics, The RAND Corporation, vol. 15(2), pages 271-280, Summer.
  12. Louis Kaplow & Steven Shavell, 1999. "Economic Analysis of Law," NBER Working Papers 6960, National Bureau of Economic Research, Inc.
  13. Shavell, Steven, 1992. "Liability and the Incentive to Obtain Information about Risk," The Journal of Legal Studies, University of Chicago Press, vol. 21(2), pages 259-70, June.
  14. Steven Shavell, 1982. "On Liability and Insurance," Bell Journal of Economics, The RAND Corporation, vol. 13(1), pages 120-132, Spring.
  15. Gary S. Becker, 1974. "Crime and Punishment: An Economic Approach," NBER Chapters, in: Essays in the Economics of Crime and Punishment, pages 1-54 National Bureau of Economic Research, Inc.
  16. Newman, Harry A. & Wright, David W., 1990. "Strict liability in a principal-agent model," International Review of Law and Economics, Elsevier, vol. 10(3), pages 219-231, December.
  17. Demougin, Dominique & Fluet, Claude, 1999. "A further justification for the negligence rule," International Review of Law and Economics, Elsevier, vol. 19(1), pages 33-45, March.
  18. T. Randolph Beard, 1990. "Bankruptcy and Care Choice," RAND Journal of Economics, The RAND Corporation, vol. 21(4), pages 626-634, Winter.
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