Abstract
In important areas like medical malpractice and environmental torts, injurers are potentially insolvent and courts may make errors in determining liability (e.g. due to hindsight bias). We show that proportional liability, which holds a negligent injurer liable for harm discounted with the probability that the harm was caused by the injurer's negligence, is less susceptible to these imperfections and therefore socially preferable to all other liability rules currently contemplated by courts. We also provide a result which might be useful to regulators when calculating minimum capital requirements or minimum mandatory insurance for different industries.
Original language | English |
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Pages (from-to) | 371-395 |
Number of pages | 25 |
Journal | B.E. Journal of Theoretical Economics |
Volume | 14 |
Issue number | 1 |
DOIs | |
State | Published - 1 Jan 2014 |
Keywords
- compliance
- court error
- judgment-proof problem
- proportional liability
- uncertain causation
All Science Journal Classification (ASJC) codes
- General Economics,Econometrics and Finance