The Filtering Effect of Sharing Rules

Abstract

Sharing rules have a filtering effect on violations: they prevent the most harmful violations and let the least harmful ones occur. We show the conditions under which the filtering effect improves social welfare and argue that this may explain why, in most areas of the law, sharing rules are, in general, preferred to rules that place the burden entirely on one party. Our analysis applies to loss sharing in tort liability, the allocation of police investigation efforts, contract remedies for nonverifiable breaches such as those that may occur in marriage and employment contracts, and the distribution of shares in partnerships.

Filtering Tort Accidents

“…also in a contract setting). 7 Filtering effects have previously been recognized in the context of sharing rules(Dari-Mattiacci and De Geest 2005). Our analysis identifies filtering in the more general setting of uncertainty.…”

Sharing Residual Liability: 'Cheapest Cost Avoider' Revisited

“…However, in equilibrium, prospective injurers and potential victims will both behave nonnegligently, and therefore a large number of the accidents that occur in reality will arise despite the due diligence of the individuals involved. 6 Thus, assuming that a tort regime is efficient with respect to precautionary care, we have the question of how society deals with such nonnegligent accidents takes on acute significance, and unsurprisingly a growing body of research is directed toward this topic (Calabresi 1996;Calabresi and Cooper 1996;Gilles 1992;Parisi and Fon 2004;Dari-Mattiacci and De Geest 2005;Parisi and Singh 2010;Garoupa and Ulen 2013;Dari-Mattiacci, Lovat, and Parisi 2014).…”