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Legal Liability when Individuals Have Moral Concerns

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  • Bruno Deffains
  • Claude Fluet

Abstract

We incorporate normative motivations into the economic model of accidents and tort rules. The social norm is that one should avoid harming others and should compensate if nevertheless harm is caused. To some extent, this is internalized through intrinsic moral concerns; moreover, those thought not to adhere to the norm are met with social disapproval. Moral and reputational concerns are not strong enough, however, for injurers to willingly compensate their victims. Absent legal liability, normative concerns induce precautions to prevent harm but precautions are then socially inefficient. By contrast, perfectly enforced legal liability crowds out informal incentives completely (e.g., individuals causing harm suffer no stigma) but precautions are then socially efficient. Under imperfectly enforced legal liability, formal legal sanctions and normative concerns are complements and interact to induce more precautions than under no-liability.

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Bibliographic Info

Paper provided by CIRPEE in its series Cahiers de recherche with number 0951.

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Date of creation: 2009
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Handle: RePEc:lvl:lacicr:0951

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Keywords: Intrinsic motivations; social norms; esteem; strict liability; negligence; crowding out;

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Cited by:
  1. Roland Benabou & Jean Tirole, 2011. "Laws and Norms," NBER Working Papers 17579, National Bureau of Economic Research, Inc.

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