Accident avoidance and settlement bargaining: The role of reciprocity
Tim Friehe and
Cat Lam Pham
International Review of Law and Economics, 2021, vol. 68, issue C
This paper explores how reciprocity concerns of potential accident victims influence potential injurers’ precautions before an accident and victims’ settlement behavior after an accident. In our framework, a strictly liable injurer privately informed about the probability of losing in trial chooses either high or low care and, in the event of an accident, the victim demands a settlement amount from the injurer. We find that victims’ intention-based reciprocity concerns tend to increase both the level of precautions and the likelihood of trial and that the impact of reciprocity concerns on equilibrium outcomes depends on the legal cost allocation rule.
Keywords: Settlement; Care; Reciprocity; Fairness (search for similar items in EconPapers)
JEL-codes: D91 K42 (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
Full text for ScienceDirect subscribers only
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:eee:irlaec:v:68:y:2021:i:c:s0144818821000557
Access Statistics for this article
International Review of Law and Economics is currently edited by C. Ott, A. W. Katz and H-B. SchÃ¤fer
More articles in International Review of Law and Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().