On judgment proofness in the case of bilateral harm

Abstract

Care incentives, Judgment proofness, Bilateral harm, Bilateral care, Tort law, K13, H23, C72,

Minimum Asset and Liability Insurance Requirements on Judgment-Proof Individuals When Harm Is Endogenous

“…The literature on tort law generally identifies negligence rules as superior to strict liability in unilateral accident settings with judgment-proof injurers. However, in bilateral accident settings,Friehe (2008) showed that strict liability with a defense of contributory negligence can perform better than simple negligence or negligence with a defense of contributory negligence.8 See, for example,Sykes (1984),Boyer and Laffont (1997),Hiriart and Martimort (2006), andBisso and Choi (2008).9 Remotely related is the study byPitchford (1995) who considers an asset requirement as a means of inducing investors to increase equity in potentially judgment-proof firms Kahane (1977),Kim and Santomero (1988),. Rochet…”