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Incentives to take care under contributory and comparative fault: The role of strategic complementarity

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  • Ogden, Benjamin G.
  • Hylton, Keith N.

Abstract

Previous literature on contributory versus comparative negligence has shown that they reach equivalent equilibria. These results, however, depend upon an insufficiently granular model of strategic incentives under the Hand Formula that ignores courts’ information constraints. Taking information constraints into account, we identify a set of cases where care by one agent significantly increases the benefits of care by the other. When such cases obtain under bilateral harm, comparative negligence generates greater incentives for care, but this additional care occurs only when it is not socially optimal (i.e., “defensive care”). By contrast, under unilateral harm or asymmetric costs of care, contributory negligence creates socially excessive care. Therefore, it is possible to socially rank negligence regimes depending upon the symmetry of potential harm and costs of care. We discuss optimal choice of rules in light of these results.

Suggested Citation

  • Ogden, Benjamin G. & Hylton, Keith N., 2020. "Incentives to take care under contributory and comparative fault: The role of strategic complementarity," International Review of Law and Economics, Elsevier, vol. 61(C).
    • Handle: RePEc:eee:irlaec:v:61:y:2020:i:c:s0144818819303473
    DOI: 10.1016/j.irle.2019.105882
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    References listed on IDEAS

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    More about this item

    Keywords

    Comparative negligence; Contributory negligence; Fault regimes; Hand Formula; Negligence; Optimal care; Strategic complementarity;
    All these keywords.

    JEL classification:

    • K13 - Law and Economics - - Basic Areas of Law - - - Tort Law and Product Liability; Forensic Economics
    • K4 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior

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