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Screening accident victims

  • Friehe, Tim

This paper considers victim heterogeneity in harm levels in a bilateral-care model, where harm is private information. In practice, resources are expended on the verification of damages suffered. We establish a sufficient condition for the possibility to accurately deduce the harm level from the observable care choice without spending on verification. For cases in which this condition does not hold, this paper sets out a simple screening mechanism that induces victims to reveal their type truthfully and induces optimal care in equilibrium without verification costs.

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File URL: http://www.sciencedirect.com/science/article/B6V7M-4VXB720-1/2/1190372465e6ca3d9b294de318bbc6fb
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Article provided by Elsevier in its journal International Review of Law and Economics.

Volume (Year): 29 (2009)
Issue (Month): 3 (September)
Pages: 272-280

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Handle: RePEc:eee:irlaec:v:29:y:2009:i:3:p:272-280
Contact details of provider: Web page: http://www.elsevier.com/locate/irle

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  9. Thomas J. Miceli, 2006. "On Negligence Rules and Self-Selection," Working papers 2006-26, University of Connecticut, Department of Economics.
  10. Amy Farmer & Paul Pecorino, 2005. "Civil Litigation with Mandatory Discovery and Voluntary Transmission of Private Information," The Journal of Legal Studies, University of Chicago Press, vol. 34(1), pages 137-159, 01.
  11. Spier, Kathryn E, 1994. "Settlement Bargaining and the Design of Damage Awards," Journal of Law, Economics and Organization, Oxford University Press, vol. 10(1), pages 84-95, April.
  12. Farmer, Amy & Pecorino, Paul, 1999. " Legal Expenditure as a Rent-Seeking Game," Public Choice, Springer, vol. 100(3-4), pages 271-88, September.
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  16. Steven Shavell, 1989. "Sharing of Information Prior to Settlement or Litigation," RAND Journal of Economics, The RAND Corporation, vol. 20(2), pages 183-195, Summer.
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