IDEAS home Printed from https://ideas.repec.org/a/ucp/jlawec/v28y1985i3p587-609.html
   My bibliography  Save this article

Uncertainty over Causation and the Determination of Civil Liability

Author

Listed:
  • Shavell, Steven

Abstract

Situations in which there is uncertainty over the cause of harm are studied (e.g., was the lung cancer due to normal exposure to medical x-radiation, to smoking, to exposure to carcinogens discharged by a chemical plant?); and the effects on incentives to reduce risk of various ways of treating such uncertainty under the liability system are identified using a theoretical model of the occurrence of harm. The main points are these. Use of a threshold probabilit' of causation (e.g., 50%) as a criterion for determining liability may adversely affect behavior: parties might face a diminished burden of liability (if their probability of causation systematically fell below the threshold) and thus do too little to reduce risk; or they might face an extra burden (if their probability were systematically above the threshold), and thus do too much. Second, the best all or nothing criterion for determining liability (a criterion under which a party is fully liable if at all liable) is different in form from a threshold probability criterion. Third, liability in proportion to the probability of causation is superior to all other criteria and results in socially ideal behavior.These points are demonstrated and analyzed in two types of case: where the uncertainty involves a party versus natural or "background" factors; and where it involves which party among several was the author of harm. The importance of the points is shown to depend on the type of case, and as well on the form of liability (strict liability or the negligence rule).The interpretation of the analysis and important qualifications to it are discussed in a concluding section.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Shavell, Steven, 1985. "Uncertainty over Causation and the Determination of Civil Liability," Journal of Law and Economics, University of Chicago Press, vol. 28(3), pages 587-609, October.
  • Handle: RePEc:ucp:jlawec:v:28:y:1985:i:3:p:587-609
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1086/467102
    Download Restriction: Access to the online full text or PDF requires a subscription.

    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

    as
    1. Philipson Tomas J & Jena Anupam B, 2006. "Who Benefits from New Medical Technologies? Estimates of Consumer and Producer Surpluses for HIV/AIDS Drugs," Forum for Health Economics & Policy, De Gruyter, vol. 9(2), pages 1-33, January.
    2. Parry, Ian W. H., 1995. "Optimal pollution taxes and endogenous technological progress," Resource and Energy Economics, Elsevier, vol. 17(1), pages 69-85, May.
    3. Jena, Anupam B. & Philipson, Tomas J., 2008. "Cost-effectiveness analysis and innovation," Journal of Health Economics, Elsevier, vol. 27(5), pages 1224-1236, September.
    4. Jones, Charles I & Williams, John C, 2000. "Too Much of a Good Thing? The Economics of Investment in R&D," Journal of Economic Growth, Springer, vol. 5(1), pages 65-85, March.
    5. Daron Acemoglu & Joshua Linn, 2004. "Market Size in Innovation: Theory and Evidence from the Pharmaceutical Industry," The Quarterly Journal of Economics, Oxford University Press, vol. 119(3), pages 1049-1090.
    6. Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716, January.
    7. Saint-Paul, Gilles, 2004. "Are intellectual property rights unfair?," Labour Economics, Elsevier, vol. 11(1), pages 129-144, February.
    8. Amy Finkelstein, 2004. "Static and Dynamic Effects of Health Policy: Evidence from the Vaccine Industry," The Quarterly Journal of Economics, Oxford University Press, vol. 119(2), pages 527-564.
    9. Joseph P. Newhouse, 1992. "Medical Care Costs: How Much Welfare Loss?," Journal of Economic Perspectives, American Economic Association, vol. 6(3), pages 3-21, Summer.
    10. Wright, Brian Davern, 1983. "The Economics of Invention Incentives: Patents, Prizes, and Research Contracts," American Economic Review, American Economic Association, vol. 73(4), pages 691-707, September.
    11. Michael Kremer, 2002. "Pharmaceuticals and the Developing World," Journal of Economic Perspectives, American Economic Association, vol. 16(4), pages 67-90, Fall.
    12. Suzanne Scotchmer, 2006. "Innovation and Incentives," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262693437, January.
    13. Weisbrod, Burton A, 1991. "The Health Care Quadrilemma: An Essay on Technological Change, Insurance, Quality of Care, and Cost Containment," Journal of Economic Literature, American Economic Association, vol. 29(2), pages 523-552, June.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Statistics

    Access and download statistics

    Corrections

    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:ucp:jlawec:v:28:y:1985:i:3:p:587-609. 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: (Journals Division). General contact details of provider: http://www.journals.uchicago.edu/JLE/ .

    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.

    We have no references for this item. You can help adding them by using 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.