Optimal Assignment of Liabilities

Patrick Gonzalez ()

Cahiers de recherche from GREEN

Abstract: I characterize a generalization of the negligence rule to assign compensating damages in an accident involving multiple tortfeasors. These tortfeasors have the opportunity to undertake spending in prevention and the rule is designed to provide them with the best incentives to do so. I study the case where liability is constraint in the sense that the optimal amount of effort (not constrained by liability) cannot be implemented. The optimal multi-player rule is to apply the negligence rule to the most liable player (the "deep-pocket" or the "victim", defined as the player who is the most responsive to monetary incentives under the strict liability rule) and the strict liability rule to everybody else.

Keywords: Negligence rule; limited liability; multiple tortfeasors (search for similar items in EconPapers)
JEL-codes: D78 H23 K13 (search for similar items in EconPapers)
Date: 2003
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Working Paper: Optimal Assignment of Liabilities (2003)
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Persistent link: https://EconPapers.repec.org/RePEc:lvl:lagrcr:0305

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