Efficient liability rules for multi-party accidents with moral hazard
AbstractThe economic analysis of tort law is extended to multi-party accidents with unobservable actions. Due to the requirement of no punitive damages, the problem resembles a team production problem. It is shown that asymmetry in the agents' impact on the stochastic damage function can be exploited to improve ex ante incentives. This implies departures from the proportional rule, based on the statistical information contained in the circumstances of the accident. If a noisy monitoring technology is introduced, then monitoring can add enough stochastic identifiability among injurers to restore efficiency.
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Bibliographic InfoPaper provided by Tilburg University in its series Open Access publications from Tilburg University with number urn:nbn:nl:ui:12-78736.
Date of creation: 1998
Date of revision:
Publication status: Published in Journal of Institutional and Theoretical Economics (1998) v.154, p.422-450
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Other versions of this item:
- Eberhard Feess & Ulrich Hege, 1998. "Efficient Liability Rules for Multi-Party Accidents With Moral Hazard," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 154(2), pages 422-450, June.
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
- K13 - Law and Economics - - Basic Areas of Law - - - Tort Law and Product Liability; Forensic Economics
- K32 - Law and Economics - - Other Substantive Areas of Law - - - Environmental, Health, and Safety Law
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- Leslie M. Marx & Francesco Squintani, 2002.
"Individual Accountability in Teams,"
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- Gonz�lez, Patrick, 2003. "Optimal Assignment of Liabilities," Cahiers de recherche 0305, GREEN.
- Endres, Alfred & Bertram, Regina, 2006. "The development of care technology under liability law," International Review of Law and Economics, Elsevier, vol. 26(4), pages 503-518, December.
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