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Efficiency Of Equilibria Under Comparative Causation

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  • FRANCESCO PARISI

    (Department of Economics, Brown University Providence, RI 02906 USA)

  • Ram Singh

    (Department of Economics, Delhi School of Economics, Delhi, India)

Abstract

For past three decades or so, the negligence liability has been a major preoccupation of the economic analysis of liability rules. However, recently it has invited severe criticisms on several counts. Several leading legal scholars have championed a comparative causation based allocation of liability. According to these scholars, comparative causation based liability is more equitable than negligence liability. Moreover, some studies show that courts and juries are inclined toward comparative apportioning of liability. Nonetheless, implications of comparative causation based liability especially its eciency properties have remained under-explored. In this paper, we have studied the implications of comparative causation. We have shown that a mix of negligence and comparative causation liabilities can induce vigilant and equitable equitable equilibria, in which parties choose to be vigilant and accident loss is shared between them. However, comparative causation achieves equity at the cost of economic effciency.

Suggested Citation

  • FRANCESCO PARISI & Ram Singh, 2009. "Efficiency Of Equilibria Under Comparative Causation," Working papers 179, Centre for Development Economics, Delhi School of Economics.
  • Handle: RePEc:cde:cdewps:179
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    References listed on IDEAS

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    1. Ram Singh, 2006. "On the Existence and Efficiency of Equilibria under Liability Rules," Working papers 150, Centre for Development Economics, Delhi School of Economics.
    2. Peter Van Wijck & Jan Winters, 2001. "The Principle of Full Compensation in Tort Law," European Journal of Law and Economics, Springer, vol. 11(3), pages 319-332, May.
    3. Francesco Parisi, 2004. "Comparative Causation," American Law and Economics Review, Oxford University Press, vol. 6(2), pages 345-368.
    4. Edlin, Aaron S., 1994. "Efficient standards of due care: Should courts find more parties negligent under comparative negligence?," International Review of Law and Economics, Elsevier, vol. 14(1), pages 21-34, March.
    5. Rea, Samuel Jr., 1987. "The economics of comparative negligence," International Review of Law and Economics, Elsevier, vol. 7(2), pages 149-162, December.
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    14. 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.
    15. Schweizer, Urs, 2009. "Legal damages for losses of chances," International Review of Law and Economics, Elsevier, vol. 29(2), pages 153-160, June.
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