On Negligence Rules and Self-Selection
AbstractEconomic models of negligence ordinarily involve a single standard of care that all injurers must meet to avoid liability. When injurers differ in their costs of care, however, this leads to distortions in their care choices. This paper derives the characteristics of a generalized negligence rule that induces injurers to self-select their optimal care levels. The principal features of the rule are (1) the due standard of care is maximal, and (2) liability increases gradually as injurers depart further from this standard. The results are broadly consistent with the gradation in liability under certain causation rules and under comparative negligence.
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Bibliographic InfoPaper provided by University of Connecticut, Department of Economics in its series Working papers with number 2006-26.
Length: 19 pages
Date of creation: Apr 2006
Date of revision:
Note: I acknowledge the helpful comments of Francesco Parisi, Richard Posner, Steven Shavell, and two referees.
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Liability; negligence rules; self-selection;
Other versions of this item:
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- K13 - Law and Economics - - Basic Areas of Law - - - Tort Law and Product Liability; Forensic Economics
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- Russell Cooper, 1984. "On Allocative Distortions in Problems of Self-Selection," RAND Journal of Economics, The RAND Corporation, vol. 15(4), pages 568-577, Winter.
- Kahan, Marcel, 1989. "Causation and Incentives to Take Care under the Negligence Rule," The Journal of Legal Studies, University of Chicago Press, vol. 18(2), pages 427-47, June.
- Oren Bar-Gill & Omri Ben-Shahar, 2003. "The Uneasy Case for Comparative Negligence," American Law and Economics Review, Oxford University Press, vol. 5(2), pages 433-469, August.
- Baumann, Florian & Friehe, Tim, 2009. "On the superiority of damage averaging in the case of strict liability," International Review of Law and Economics, Elsevier, vol. 29(2), pages 138-142, June.
- Tim Friehe, 2007. "On the incentive effects of damage averaging in tort law," Economics Bulletin, AccessEcon, vol. 11(2), pages 1-7.
- repec:ebl:ecbull:v:11:y:2007:i:2:p:1-7 is not listed on IDEAS
- Friehe, Tim, 2009. "Screening accident victims," International Review of Law and Economics, Elsevier, vol. 29(3), pages 272-280, September.
- Alfred Endres & Tim Friehe, 2014. "The reasonable person standard: trading off static and dynamic efficiency," European Journal of Law and Economics, Springer, vol. 37(2), pages 249-267, April.
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