Liability Standards for Multiple-Victim Torts: A Call for a New Paradigm

Yoed Halbersberg

Discussion Paper Series from The Federmann Center for the Study of Rationality, the Hebrew University, Jerusalem

Abstract: Under the conventional approach in torts, liability for an accident is decided by comparing the injurers costs of precautions with those of the victim, and, under the negligence rule, also with the expected magnitude of harm. In multiplevictim cases, the current paradigm holds that courts should determine liability by comparing the injurers costs of precautions with the victims aggregate costs and with their aggregate harm. This aggregative risk-utility test supposedly results in the imposition of liability on the least-cost avoiders of the accident, and, therefore, is assumed efficient. However, this paradigm neglects the importance of the normal differences between tort victims. When victims are heterogeneous with regard to their expected harm or costs of precaution, basing the liability-decision on the aggregate amounts may be incorrect, causing in some cases over-deterrence, while in other, under-deterrence and dilution of liability. A new paradigm is therefore needed. This Article demonstrates how aggregate liability may violate aggregate efficiency, and concludes that decisions based upon aggregate amounts are inappropriate when the victims are heterogeneous they typically are in real life. The Article then turns to an exploration of an alternative to the aggregative risk-utility test, and argues for a legal rule that would combine restitution for precaution costs, plus an added small bonus, with the sampling of victims claims.

Pages: 43 pages
Date: 2010-02
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