Law and Economics-Charles W. Upton Negligence

The Problem Neither the rule of strict liability nor the rule of no liability gives both victim and injurer the incentive to avoid an accident

Negligence Negligence Rules Both parties must meet some standard of care, else they are liable.

Negligence Negligence Rules Both parties must meet some standard of care, else they are liable. –A completely careless victim means no liability for the injurer –A completely careless injurer means strict liability.

Negligence No Liability Modified The injurer is not responsible if he meets some standard of care, x i *.

Negligence No Liability Modified The injurer is not responsible if he meets some standard of care, x i *.

Negligence No Liability Modified The injurer is not responsible if he meets some standard of care, x i *.

Negligence Why does this get us to optimum? Xi*Xi* wi*wi*

Negligence Why does this get us to optimum? Xi*Xi* wi*wi*  P(x v,x i )D

Negligence Why does this get us to optimum? Xi*Xi* wi*wi*  P(x v,x i )D Go Here

Negligence Strict Liability Modified Victim cannot recover unless he meets some standard of care, x v *.

Negligence Strict Liability Modified Victim cannot recover unless he meets some standard of care, x v *.

Negligence A Second Example Victim cannot recover unless he meets some standard of care, x v *.

Negligence Why does this get us to optimum? Xv*Xv* wv*wv*

Negligence Why does this get us to optimum? Xv*Xv* wv*wv*  P(x v,x i )A

Negligence Why does this get us to optimum? Xv*Xv* wv*wv*  P(x v,x i )A Go Here

Negligence End ©2004 Charles W. Upton