A revised model of unilateral accidents
This paper suggests and justifies a revised formulation of the unilateral accident model based on relaxing two assumptions of the standard model: the precaution function and the harm function. The revised model is, therefore, more general and corresponds better to various situations. A resulting trait of the generalized model is its account for the interaction between the injurer's care and activity levels, which was implicitly assumed away so far. The revised model is examined using a few standard issues in tort and the analysis brings new results and insights for the unilateral accident case. For example, the view that, under a negligence regime, due care can be defined regardless of the optimal level of activity holds under very restrictive assumptions. In general, due care must be defined simultaneously with the optimal activity level. In addition, the common view suggests that underestimation of the level of actual damages under strict liability would induce injurers to take insufficient care and to engage excessively in a risky activity (and vice versa, for overestimation). This paper shows that underestimation of actual damages may counter-intuitively lead to insufficient activity or excessive care levels. Similarly, the results of underestimating harm under a negligence regime prove to be different than commonly thought. In addition, the revised model questions the intuitive similarity between the underestimation of harm and the judgment-proof problem, and provides some new results for the latter problem.
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.:
- Kaplow, Louis & Shavell, Steven, 2002.
"Economic analysis of law,"
Handbook of Public Economics,
in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 3, chapter 25, pages 1661-1784
- 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.
- Dari-Mattiacci, Giuseppe & De Geest, Gerrit, 2006.
"When will judgment proof injurers take too much precaution?,"
International Review of Law and Economics,
Elsevier, vol. 26(3), pages 336-354, September.
- G. Dari Mattiacci & G.G.A. de Geest, 2004. "When Will Judgment Proof Injurers Take Too Much Precaution?," Working Papers 04-27, Utrecht School of Economics.
- Giuseppe Dari Mattiacci & Gerrit De Geest, . "When Will Judgment Proof Injurers Take Too Much Precaution?," German Working Papers in Law and Economics 2002-1-1051, Berkeley Electronic Press.
- Farmer, Amy & Kahn, James R. & McDonald, Judith A. & O'Neill, Robert, 2001. "Rethinking the optimal level of environmental quality: justifications for strict environmental policy," Ecological Economics, Elsevier, vol. 36(3), pages 461-473, March.
- Flath, David, 2006. "Taxicab regulation in Japan," Journal of the Japanese and International Economies, Elsevier, vol. 20(2), pages 288-304, June.
- 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.
- T. Randolph Beard, 1990. "Bankruptcy and Care Choice," RAND Journal of Economics, The RAND Corporation, vol. 21(4), pages 626-634, Winter.
- Hahn, Robert W & Stavins, Robert N, 1992. "Economic Incentives for Environmental Protection: Integrating Theory and Practice," American Economic Review, American Economic Association, vol. 82(2), pages 464-68, May.
- Shavell, S., 1986. "The judgment proof problem," International Review of Law and Economics, Elsevier, vol. 6(1), pages 45-58, June.
When requesting a correction, please mention this item's handle: RePEc:eee:irlaec:v:29:y:2009:i:2:p:169-177. 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 references are entirely missing, you can add them using this form.