IDEAS home Printed from
   My bibliography  Save this article

Optimal liability when the injurer's information about the victim's loss is imperfect


  • Mitchell Polinsky, A.


A central result in the economic theory of liability is that, if an injurer's liability equals the victim's loss, then either the rule of strict liability or the rule of negligence can induce the injurer to behave properly. However, for this result to hold, the injurer must know the victim's loss before the injurer decides whether to engage in the harmful activity and, g fortiori, before any harm has occurred. This paper reevaluates the rules of strict liability and negligence when the injurer's information is imperfect. Two questions are addressed: Under each rule, should the level of liability imposed on the injurer still equal the victim's loss? Are the rules of strict liability and negligence still equally desirable? With respect to the first question, it is demonstrated that the optimal level of liability generally is not equal to the victim's loss. With respect to the second question, it is shown that if the injurer's liability equals the victim's loss, then the two rules are equivalent, but if liability is set optimally under each rule, then strict liability generally induces the injurer to behave in a more appropriate way.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Mitchell Polinsky, A., 1987. "Optimal liability when the injurer's information about the victim's loss is imperfect," International Review of Law and Economics, Elsevier, vol. 7(2), pages 139-147, December.
  • Handle: RePEc:eee:irlaec:v:7:y:1987:i:2:p:139-147

    Download full text from publisher

    File URL:
    Download Restriction: Full text for ScienceDirect subscribers only

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    1. Peter A. Diamond, 1974. "Single Activity Accidents," The Journal of Legal Studies, University of Chicago Press, vol. 3(1), pages 107-164, January.
    2. Craswell, Richard & Calfee, John E, 1986. "Deterrence and Uncertain Legal Standards," Journal of Law, Economics, and Organization, Oxford University Press, vol. 2(2), pages 279-303, Fall.
    3. Landes, William M. & Posner, Richard A., 1981. "An economic theory of intentional torts," International Review of Law and Economics, Elsevier, vol. 1(2), pages 127-154, December.
    Full references (including those not matched with items on IDEAS)

    More about this item


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:irlaec:v:7:y:1987:i:2:p:139-147. 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: (Dana Niculescu). General contact details of provider: .

    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 CitEc recognized a reference but did not link an item in RePEc 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 RePEc Author Service 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.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.