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Efficient Liability Rules for Multi-Party Accidents with Moral Hazard

Author

Listed:
  • Ulrich Hege

    (GREGH - Groupement de Recherche et d'Etudes en Gestion à HEC - HEC Paris - Ecole des Hautes Etudes Commerciales - CNRS - Centre National de la Recherche Scientifique)

  • Eberhard Feess

Abstract

The economic analysis of tort law is extended to multi-party accidents with unobservable actions. Due to the requirement of no punitive damages, the problem resembles a team production problem. It is shown that asymmetry in the agents' impact on the stochastic damage function can be exploited to improve ex ante incentives. This implies departures from the proportional rule, based on the statistical information contained in the circumstances of the accident. If a noisy monitoring technology is introduced, then monitoring can add enough stochastic identifiability among injurers to restore efficiency.

Suggested Citation

  • Ulrich Hege & Eberhard Feess, 1998. "Efficient Liability Rules for Multi-Party Accidents with Moral Hazard," Post-Print hal-00759758, HAL.
    • Handle: RePEc:hal:journl:hal-00759758
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    Cited by:

    1. Marx, Leslie M. & Squintani, Francesco, 2009. "Individual accountability in teams," Journal of Economic Behavior & Organization, Elsevier, vol. 72(1), pages 260-273, October.
    2. Baumann, Florian & Charreire, Maxime & Cosnita-Langlais, Andreea, 2020. "Market collusion with joint harm and liability sharing," International Review of Law and Economics, Elsevier, vol. 62(C).
    3. Endres, Alfred & Bertram, Regina, 2006. "The development of care technology under liability law," International Review of Law and Economics, Elsevier, vol. 26(4), pages 503-518, December.
    4. González, Patrick, 2003. "Optimal Assignment of Liabilities," Cahiers de recherche 0305, Université Laval - Département d'économique.
    5. Yi Li, 2019. "Apportioning indivisible damage and strategic diffusion of pollution abatement technology," Journal of Economics, Springer, vol. 126(1), pages 19-42, January.

    More about this item

    Keywords

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    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • K13 - Law and Economics - - Basic Areas of Law - - - Tort Law and Product Liability; Forensic Economics
    • K32 - Law and Economics - - Other Substantive Areas of Law - - - Energy, Environmental, Health, and Safety Law

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