| By: |
Allan M. Feldman (Department of Economics, Brown University Providence, RI 02906 USA);
Ram Singh (Department of Economics, Delhi School of Economics, Delhi, India) |
| Abstract: |
A growing body of literature suggests that courts and juries are inclined
toward division of liability between two strictly non-negligent or “vigilant”
parties. However, standard models of liability rules do not provide for
vigilance-based sharing of liability. In this paper, we explore the economic
efficiency of liability rules based on comparative vigilance. We devise rules
that are efficient and that reward vigilance. It is commonly believed that
discontinuous liability shares are necessary for efficiency. However we
develop a liability rule, which we call the “super-symmetric rule,” that is
both efficient and continuous, that is based on comparative negligence when
both parties are negligent and on comparative vigilance when both parties are
vigilant, and that is always responsive to increased care. Moreover, our
super-symmetric rule divides accident losses into two parts: one part creates
incentives for efficiency; the other part provides equity. |
| Keywords: |
Comparative vigilance, equity, economic efficiency, tort liability rules, Nash equilibrium, social costs, pure comparative vigilance, super-symmetric rule |
| JEL: |
K13 D61 |
| Date: |
2008–11 |
| URL: |
http://d.repec.org/n?u=RePEc:cde:cdewps:173&r=law |