On the Existence and Efficiency of Equilibria Under Liability Rules

Singh, Ram

doi:10.3386/w12625

Cited by 10 publications

(7 citation statements)

References 33 publications

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“…11. For an analysis of the effects of liability rules on parties' incentives to take care, see also Landes and Posner (1983), Haddock and Curran (1985), and Singh (2006). conditions, 12 parties' compliance with the standard of due care can be achieved in equilibrium not only for any residual-loss-sharing rule implemented among negligent parties (Landes and Posner's [1980] result) but also for any loss-sharing rule implemented among nonnegligent parties.…”

Section: Residual Loss Sharing In Legal and Economic Theorymentioning

confidence: 99%

“…3) to consider different interactions of parties' activity choices in the production of the expected loss from an accident (see Section 4.4). See also Dharmapala and Hoffmann (2005) and Singh (2006). 17.…”

Section: Setting the Stage: Loss Sharing Among Nonnegligent Partiesmentioning

confidence: 99%

“…18. It has been established in the literature that under any fault-based liability rule, if due-care standards and the loss-sharing rule among nonnegligent parties are set at the (second-best) socially optimal level, parties have optimal incentives to comply with the due-care standards regardless of the loss-sharing rule implemented among negligent parties (Singh 2006;Dari-Mattiacci, Lovat, and Parisi 2014).…”

Section: Setting the Stage: Loss Sharing Among Nonnegligent Partiesmentioning

confidence: 99%

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Sharing Residual Liability: The Cheapest Cost Avoider Revisited

Carbonara

Guerra

Parisi

2016

The Journal of Legal Studies

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Economic models of tort law evaluate the efficiency of liability rules in terms of care and activity levels. A liability regime is optimal when it creates incentives to maximize the value of risky activities net of accident and precaution costs. The allocation of primary and residual liability allows policy makers to induce parties to undertake socially desirable care and activity levels.Traditionally, tort law systems have assigned residual liability either entirely on the tortfeasor or entirely on the victim. In this paper, we unpack the cheapest-cost-avoider principle to consider the virtues and limits of loss-sharing rules in generating optimal (second-best) incentives and allocations of risk. We find that loss sharing may be optimal in the presence of countervailing policy objectives, homogeneous risk avoiders, and subadditive risk, which potentially offers a valuable tool for policy makers and courts in awarding damages in a large number of real-world accident cases.

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Section: Residual Loss Sharing In Legal and Economic Theorymentioning

confidence: 99%

Section: Setting the Stage: Loss Sharing Among Nonnegligent Partiesmentioning

confidence: 99%

Section: Setting the Stage: Loss Sharing Among Nonnegligent Partiesmentioning

confidence: 99%

See 1 more Smart Citation

Sharing Residual Liability: The Cheapest Cost Avoider Revisited

Carbonara

Guerra

Parisi

2016

The Journal of Legal Studies

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Section: Setting the Stage: Loss Sharing Among Nonnegligent Partiesmentioning

confidence: 99%

Sharing Residual Liability: 'Cheapest Cost Avoider' Revisited

2013

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Economic models of tort law evaluate the efficiency of liability rules in terms of care and activity levels. A liability regime is optimal when it creates incentives to maximize the value of risky activities net of accident and precaution costs. The allocation of primary and residual liability allows policy makers to induce parties to undertake socially desirable care and activity levels. Traditionally, tort law systems have assigned residual liability either entirely on the tortfeasor or entirely on the victim. In this paper, we unpack the cheapest-cost-avoider principle to consider the virtues and limits of loss-sharing rules in generating optimal (second-best) incentives and allocations of risk. We find that loss sharing may be optimal in the presence of countervailing policy objectives, homogeneous risk avoiders, and subadditive risk, which potentially offers a valuable tool for policy makers and courts in awarding damages in a large number of real-world accident cases.

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“…Kahan (1989), Grady (1989), Honoré (1997) and Singh (2007) have argued that property A, and the discontinuity in liability assignments it implies, may not be consistent with the doctrine of "causation." On the other hand, some papers have focused on the importance of properties A, B, and C for inducing efficiency; see for instance Jain and Singh (2002), Kim (2004), Parisi and Fon (2004), and Singh (2006).…”

Section: Introductionmentioning

confidence: 99%

Comparative Vigilance: A Simple Guide

Feldman

Singh

2008

SSRN Journal

Self Cite

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. AbstractIn this paper we discuss a new tort liability rule, which we call super-symmetric comparative negligence and vigilance. When both injurer and victim in an accident are negligent, it provides for liability shares that depend on the degrees of negligence of the two parties, similar to the standard comparative negligence rule. Unlike standard liability rules, however, when both parties are vigilant (i.e., taking more care than is efficient), the rule provides for liability shares that depend on the parties' degrees of vigilance. Moreover, when one party is negligent and the other is non-negligent, our rule provides for variable liability shares, that respond to both carefulness and carelessness of the parties. Our liability rule is equitable; it has no discontinuity at the efficient point where both parties are just meeting their standards of care; and it provides incentives that guarantee the injurer and victim will choose the efficient care levels. This paper does not include theorems and proofs; rather it explains the results with the aid of a simple example, laid out in an easy 3 x 3 table.

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On the Existence and Efficiency of Equilibria Under Liability Rules

Cited by 10 publications

References 33 publications

Sharing Residual Liability: The Cheapest Cost Avoider Revisited

Sharing Residual Liability: The Cheapest Cost Avoider Revisited

Sharing Residual Liability: 'Cheapest Cost Avoider' Revisited

Comparative Vigilance: A Simple Guide

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