The robustness case for proportional liability

Alexander Stremitzer, Avraham D. Tabbach

Research output: Contribution to journalArticlepeer-review

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 languageEnglish
Pages (from-to)371-395
Number of pages25
JournalB.E. Journal of Theoretical Economics
Volume14
Issue number1
DOIs
StatePublished - 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

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