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Liability for Third-Party Harm When Harm-Inflicting Consumers Are Present Biased

Author

Listed:
  • Tim Friehe
  • Christoph Rößler
  • Xiaoge Dong

Abstract

This article analyzes the workings of liability when harm-inflicting consumers are present biased and both product safety and consumer care influence expected harm. We show that present bias introduces a rationale for shifting some losses onto the manufacturer, in stark contrast with the baseline scenario in which strict consumer liability induces socially optimal product safety and precaution levels. In addition, we establish that strict liability with contributory negligence may induce socially optimal product safety and precaution choices.

Suggested Citation

  • Tim Friehe & Christoph Rößler & Xiaoge Dong, 2020. "Liability for Third-Party Harm When Harm-Inflicting Consumers Are Present Biased," American Law and Economics Review, American Law and Economics Association, vol. 22(1), pages 75-104.
    • Handle: RePEc:oup:amlawe:v:22:y:2020:i:1:p:75-104.
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    File URL: http://hdl.handle.net/10.1093/aler/ahz013
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    Cited by:

    1. Tsvetanov, Tsvetan & Miceli, Thomas J. & Segerson, Kathleen, 2021. "Products liability with temptation bias," Journal of Economic Behavior & Organization, Elsevier, vol. 186(C), pages 76-93.
    2. Obidzinski, Marie & Oytana, Yves, 2024. "Artificial intelligence, inattention and liability rules," International Review of Law and Economics, Elsevier, vol. 79(C).
    3. Marie Obidzinski & Yves Oytana, 2025. "Advisory algorithms, automation bias and liability rules," Working Papers 2025-08, CRESE.
    4. Marie Obidzinski & Yves Oytana, 2022. "Advisory algorithms and liability rules," Working Papers hal-04222291, HAL.
    5. Marie Obidzinski & Yves Oytana, 2022. "Prediction, human decision and liability rules, CRED Working paper No 2022-06," Working Papers hal-04034871, HAL.

    More about this item

    JEL classification:

    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • K13 - Law and Economics - - Basic Areas of Law - - - Tort Law and Product Liability; Forensic Economics

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