The Negligence Rule Specificity under Radical Uncertainty

Gerard Mondello

No 2016-32, GREDEG Working Papers from Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), Université Côte d'Azur, France

Abstract: This article is an attempt to reassess the relationships between the strict liability regime and the negligence rule under radical uncertainty (ambiguity theory). In an accident model two representative agents (potential injurer and victim) form divergent beliefs about the probability distribution of an accident and the potential damage scale. It issues on the following results: 1) When the injurer's wealth cover the damage cost, then the socially first-best level of care is established by the injurer under strict liability only. When, the injurer's wealth is insufficient, this level is not reach (capped strict liability regime for instance). 2) Under negligence, the authorities (Regulator or Court) can choose as first best level of care either the level that favors the injurer's interests or the victim ones of. No rational rule can justify a choice rather than the other. 3) The efficiency of both regimes cannot be compared because they obey to different logics.

Keywords: unilateral accident; tort law; safety; large risks; ambiguity; pessimism and optimism; strict liability; negligence; ultra-hazardous activities (search for similar items in EconPapers)
JEL-codes: D62 K13 K23 K32 Q52 Q58 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2016-11
New Economics Papers: this item is included in nep-law and nep-mic
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Related works:
Working Paper: The Negligence Rule Specificity under Radical Uncertainty (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:gre:wpaper:2016-32

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