Caution, children crossing: Heterogeneity of victim's cost of care and negligence rule
The paper deals with a bilateral accident situation in which victims have heterogeneous costs of care. With perfect information,efficient care by the injurer raises with the victim's cost. When the injurer cannot observe at all the victim's type, and this fact can be verified by Courts, first-best cannot be implemented with the use of a negligence rule based on the first-best levels of care. Second-best leads the injurer to intermediate care, and the two types of victims to choose the best response to it. This second-best solution can be easily implemented by a negligence rule with second-best as due care. We explore imperfect observation of the victim's type, characterizing the optimal solution and examining the different legal alternatives when Courts cannot verify the injurers' statements. Counterintuitively, we show that there is no difference at all between the use by Courts of a rule of complete trust and a rule of complete distrust towards the injurers' statements. We then relate the findings of the model to existing rules and doctrines in Common Law and Civil Law legal systems.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Steven Shavell, 2003.
"Economic Analysis of Accident Law,"
NBER Working Papers
9694, National Bureau of Economic Research, Inc.
- Kaplow, Louis & Shavell, Steven, 1994. "Why the Legal System Is Less Efficient Than the Income Tax in Redistributing Income," The Journal of Legal Studies, University of Chicago Press, vol. 23(2), pages 667-81, June.
- Kaplow, Louis & Shavell, Steven, 2000. "Should Legal Rules Favor the Poor? Clarifying the Role of Legal Rules and the Income Tax in Redistributing Income," The Journal of Legal Studies, University of Chicago Press, vol. 29(2), pages 821-35, June.
- Sanchirico, Chris William, 2000. "Taxes versus Legal Rules as Instruments for Equity: A More Equitable View," The Journal of Legal Studies, University of Chicago Press, vol. 29(2), pages 797-820, June.
- Miceli, Thomas J., 1997. "Economics of the Law: Torts, Contracts, Property, Litigation," OUP Catalogue, Oxford University Press, number 9780195103908, December.
- Arlen, Jennifer H, 1992. "Should Defendants' Wealth Matter?," The Journal of Legal Studies, University of Chicago Press, vol. 21(2), pages 413-29, June.
- Louis Kaplow & Steven Shavell, 1993.
"Accuracy in the Assessment of Damages,"
NBER Working Papers
4287, National Bureau of Economic Research, Inc.
When requesting a correction, please mention this item's handle: RePEc:upf:upfgen:666. 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: ()
If references are entirely missing, you can add them using this form.