On the superiority of damage averaging in the case of strict liability
The literature argues that if injurers cannot anticipate the precise level of harm, courts might use expected harm as a magnitude of compensation instead of actual harm without distorting care incentives. This paper shows that the use of expected harm is in fact preferable if victims choose the value of the object placed at risk. If the court were to insist on compensating actual harm, this would result in victims choosing inefficient object values. In contrast, restricting compensation to expected harm yields the first-best outcome.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Louis Kaplow & Steven Shavell, 1993.
"Accuracy in the Assessment of Damages,"
NBER Working Papers
4287, National Bureau of Economic Research, Inc.
- Thomas J. Miceli, 2006.
"On Negligence Rules and Self-Selection,"
2006-26, University of Connecticut, Department of Economics.
- Guiseppe Dari Mattiaci & G.G.A. de Geest, 2003.
"Judgement Proofness under Four Different Precaution Technologies,"
03-16, Utrecht School of Economics.
- Giuseppe Dari-Mattiacci & Gerrit De Geest, 2005. "Judgment Proofness under Four Different Precaution Technologies," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 161(1), pages 38-, March.
- Che, Yeon-Koo, 1996. "Equilibrium formation of class action suits," Journal of Public Economics, Elsevier, vol. 62(3), pages 339-361, November.
- Nicolas Marceau & Steeve Mongrain, 2001.
"Damage Averaging and the Formation of Class Action Suits,"
Cahiers de recherche CREFE / CREFE Working Papers
139, CREFE, Université du Québec à Montréal.
- Marceau, Nicolas & Mongrain, Steeve, 2003. "Damage averaging and the formation of class action suits," International Review of Law and Economics, Elsevier, vol. 23(1), pages 63-74, March.
- Shavell, Steven, 2007. "Liability for Accidents," Handbook of Law and Economics, Elsevier.
- Emons, Winand & Sobel, Joel, 1991.
"On the Effectiveness of Liability Rules when Agents Are Not Identical,"
Review of Economic Studies,
Wiley Blackwell, vol. 58(2), pages 375-90, April.
- Emons,Winand & Sobel,Joel, 1988. "On the effectiveness of liability rules when agents are not identical," Discussion Paper Serie A 212, University of Bonn, Germany.
When requesting a correction, please mention this item's handle: RePEc:eee:irlaec:v:29:y:2009:i:2:p:138-142. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.