Customary versus technological advancement tests
In an environment where the optimal level of care is unknown, we ask, under a state-of-the-art defense, which method is better able to induce parties to undertake optimal care. Assuming courts can see a noisy signal of research activities undertaken by a defendant and by some of its competitors, we ask whether courts should use a biased or an unbiased average to compare care. We find that the latter is advantageous.
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References listed on IDEAS
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- Lazear, Edward P & Rosen, Sherwin, 1981.
"Rank-Order Tournaments as Optimum Labor Contracts,"
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407R, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
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- Polinsky, A Mitchell, 1980. "Strict Liability vs. Negligence in a Market Setting," American Economic Review, American Economic Association, vol. 70(2), pages 363-67, May.
- Viscusi, W Kip & Moore, Michael J, 1993. "Product Liability, Research and Development, and Innovation," Journal of Political Economy, University of Chicago Press, vol. 101(1), pages 161-84, February.
- Michael Spence, 1977. "Consumer Misperceptions, Product Failure and Producer Liability," Review of Economic Studies, Oxford University Press, vol. 44(3), pages 561-572.
- Boyd, James & Ingberman, Daniel E, 1997. "Should "Relative Safety" Be a Test of Product Liability?," The Journal of Legal Studies, University of Chicago Press, vol. 26(2), pages 433-73, June.
- Brown, John P, 1974. "Product Liability: The Case of an Asset with Random Life," American Economic Review, American Economic Association, vol. 64(1), pages 149-61, March.
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