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Liability for Accidents

  • Steven Shavell

This is a survey of legal liability for accidents. Three general aspects of accident liability are addressed. The first is the effect of liability on incentives, both whether to engage in activities (for instance, whether to drive) and how much care to exercise (at what speed to travel) to reduce risk when so doing. The second general aspect concerns risk-bearing and insurance, for the liability system acts as an implicit insurer for accident victims and it imposes risk on potential injurers (because they may have to pay judgments to victims). In this regard, victims' accident insurance and injurers' liability insurance are taken into account. The third general aspect of accident liability is its administrative expense, comprising the cost of legal services, the value of litigants' time, and the operating cost of the courts. A range of subtopics are considered, including product liability, causation, punitive damages, the judgment-proof problem, vicarious liability, and nonpecuniary harm. Liability is also compared to other methods of controlling harmful activities, notably, to corrective taxation and to regulation.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 11781.

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Date of creation: Nov 2005
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Publication status: published as Shavell, Steven, 2007. "Liability for Accidents," Handbook of Law and Economics, Elsevier.
Handle: RePEc:nbr:nberwo:11781
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