1. Law and Economics-Charles W. Upton A Model of Joint Action

2. We see that both victim and injurer must have incentives to avoid an accident. Hence we model their joint action.

3. A Model of Joint Action

4. Units of Accident Prevention by Victim Units of Accident Prevention by Injurer

5. A Model of Joint Action Cost per unit of Accident Prevention by Victim Cost per unit of Accident Prevention by Injurer

6. A Model of Joint Action Probability of an Accident

7. A Model of Joint Action Cost of an Accident

8. A Model of Joint Action Optimization

9. A Model of Joint Action Optimization The Cost of an Hour

10. A Model of Joint Action Optimization Decreased probability of an accident x the cost of an accident

11. A Model of Joint Action Optimization Spend time and money on accident prevention until the MC exactly equals the MB.

12. A Model of Joint Action 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

13. A Model of Joint Action Rule of no Liability Injurer’s Objective Function

14. A Model of Joint Action Rule of no Liability Injurer’s Objective Function The Right Solution

15. A Model of Joint Action Rule of no Liability Potential injurer has no incentives to be careful

16. A Model of Joint Action Rule of Strict Liability Victim’s Objective Function

17. A Model of Joint Action Rule of Strict Liability Victim’s Objective Function The Right Solution

18. A Model of Joint Action Rule of Strict Liability Potential victim has no incentives to be careful

19. A Model of Joint Action There is a Problem Fortunately there is a way around this difficulty. Negligence rules.

20. A Model of Joint Action End ©2004 Charles W. Upton