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Comparative Vigilance

A growing body of literature suggests that courts and juries are inclined toward division of liability between two strictly non-negligent or “vigilant” parties. However, standard models of liability rules do not provide for vigilance-based sharing of liability. In this paper, we explore the economic efficiency of liability rules based on comparative vigilance. We devise liability rules that are efficient and that reward vigilance exhibited by the parties. It is commonly believed that discontinuous liability shares are necessary for efficiency, but we develop a liability rule that is both efficient and continuous, based on comparative negligence when both parties are negligent and on comparative vigilance when both parties are vigilant. Moreover, our rule divides accident losses into two parts: one part creates incentives for efficiency; the other part provides equity.

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Paper provided by Brown University, Department of Economics in its series Working Papers with number 2008-9.

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Date of creation: 2008
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Handle: RePEc:bro:econwp:2008-9
Contact details of provider: Postal: Department of Economics, Brown University, Providence, RI 02912

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  1. Jeonghyun Kim, 2004. "A Complete Characterization of Efficient Liability Rules: Comment," Journal of Economics, Springer, vol. 81(1), pages 61-75, 01.
  2. Rea, Samuel Jr., 1987. "The economics of comparative negligence," International Review of Law and Economics, Elsevier, vol. 7(2), pages 149-162, December.
  3. Allan M. Feldman & Jeonghyun Kim, 2002. "The Hand Rule and United States v. Carroll Towing Co. Reconsidered," Working Papers 2002-27, Brown University, Department of Economics.
  4. Miceli, Thomas J., 1997. "Economics of the Law: Torts, Contracts, Property, Litigation," OUP Catalogue, Oxford University Press, number 9780195103908, March.
  5. Oren Bar-Gill & Omri Ben-Shahar, 2003. "The Uneasy Case for Comparative Negligence," American Law and Economics Review, Oxford University Press, vol. 5(2), pages 433-469, August.
  6. Ram Singh, 2008. "On The Existence and Efficiency of Equilibria Under Liability Rules," Working Papers id:1716, eSocialSciences.
  7. Yu-Ping Liao & Michelle J. White, 2002. "No-Fault for Motor Vehicles: An Economic Analysis," American Law and Economics Review, Oxford University Press, vol. 4(2), pages 258-294.
  8. Kahan, Marcel, 1989. "Causation and Incentives to Take Care under the Negligence Rule," The Journal of Legal Studies, University of Chicago Press, vol. 18(2), pages 427-47, June.
  9. Francesco Parisi, 2004. "Comparative Causation," American Law and Economics Review, Oxford University Press, vol. 6(2), pages 345-368.
  10. Kaplow, Louis, 1995. "A Model of the Optimal Complexity of Legal Rules," Journal of Law, Economics and Organization, Oxford University Press, vol. 11(1), pages 150-63, April.
  11. Kim, Jeonghyun & Feldman, Allan M., 2006. "Victim or injurer, small car or SUV: Tort liability rules under role-type uncertainty," International Review of Law and Economics, Elsevier, vol. 26(4), pages 455-477, December.
  12. Miceli, Thomas J., 1996. "Cause in fact, proximate cause, and the hand rule: Extending Grady's positive economic theory of negligence," International Review of Law and Economics, Elsevier, vol. 16(4), pages 473-482, December.
  13. P. A. Diamond, 1973. "Single Activity Accidents," Working papers 113, Massachusetts Institute of Technology (MIT), Department of Economics.
  14. Feldman, Allan M. & Frost, John M., 1998. "A simple model of efficient tort liability rules," International Review of Law and Economics, Elsevier, vol. 18(2), pages 201-215, June.
  15. Marks, Stephen, 1994. "Discontinuities, Causation, and Grady's Uncertainty Theorem," The Journal of Legal Studies, University of Chicago Press, vol. 23(1), pages 287-301, January.
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