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The Efficiency of Comparative Causation

Author

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  • Parisi Francesco

    (University of Minnesota and University of Bologna University of Delhi)

  • Singh Ram

    (University of Minnesota and University of Bologna University of Delhi)

Abstract

Under a rule of comparative causation, an accident loss is shared between a victim and a tortfeasor when the parties are either both negligent (as with comparative negligence) or when they are both non-negligent. When one or the other party is found solely negligent, the negligent party bears the entire accident loss. Comparative causation is the only tort regime that allows sharing of an accident loss between a non-negligent injurer and his non-negligent victim. By allowing the sharing of an accident loss in equilibrium, the comparative causation rule has efficiency and risk-allocation properties that are never observed under conventional negligence or strict liability regimes. With respect to efficiency, the comparative causation rule spreads activity level and R&D incentives between the parties, rather than concentrating them on one or the other party (the residual bearer). With respect to the allocation of risk, comparative causation avoids the all-or-nothing allocations of the residual loss that we observe under other legal rules. In doing so, comparative causation provides a mechanism of mutual insurance of victim and tortfeasor with a more equitable apportionment of the residual loss. In spite of these interesting attributes, the existing literature still falls short of establishing the compatibility of comparative causation with efficiency. In this paper, we show that loss sharing can be achieved while preserving optimal care incentives for both parties.

Suggested Citation

  • Parisi Francesco & Singh Ram, 2010. "The Efficiency of Comparative Causation," Review of Law & Economics, De Gruyter, vol. 6(2), pages 219-245, September.
  • Handle: RePEc:bpj:rlecon:v:6:y:2010:i:2:n:5
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    References listed on IDEAS

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    Cited by:

    1. Jain Satish K. & Kundu Rajendra P., 2015. "Decomposition of Accident Loss and Efficiency of Liability Rules," Review of Law & Economics, De Gruyter, vol. 11(3), pages 453-480, November.
    2. Samuel Ferey & Pierre Dehez, 2016. "Multiple Causation, Apportionment, and the Shapley Value," The Journal of Legal Studies, University of Chicago Press, vol. 45(1), pages 143-171.
    3. Giuseppe Dari-Mattiacci & Bruno Lovat & Francesco Parisi, 2014. "Loss-Sharing between Nonnegligent Parties," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 170(4), pages 571-598, December.
    4. Ferey, S. & Dehez, P., 2015. "Multiple causation, apportionment and the Shapley value," CORE Discussion Papers 2015016, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    5. Dari-Mattiacci Giuseppe & Hendriks Eva S., 2013. "Relative Fault and Efficient Negligence: Comparative Negligence Explained," Review of Law & Economics, De Gruyter, vol. 9(1), pages 1-40, June.
    6. Dehez, Pierre & Ferey, Samuel, 2013. "How to share joint liability: A cooperative game approach," Mathematical Social Sciences, Elsevier, vol. 66(1), pages 44-50.
    7. Emanuela Carbonara & Alice Guerra & Francesco Parisi, 2016. "Sharing Residual Liability: The Cheapest Cost Avoider Revisited," The Journal of Legal Studies, University of Chicago Press, vol. 45(1), pages 173-201.
    8. DEHEZ, Pierre & FEREY, Samuel, 2012. "How to share joint liability: a cooperative game approach," CORE Discussion Papers 2012023, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    9. Acciarri Hugo A. & Tohmé Fernando & Castellano Andrea, 2016. "Causal Apportionment of Tort Liability: An Efficient Approach," Review of Law & Economics, De Gruyter, vol. 12(1), pages 37-55, March.

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