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Judgment Proofness under Four Different Precaution Technologies

Giuseppe Dari-Mattiacci and Gerrit De Geest

Journal of Institutional and Theoretical Economics (JITE), 2005, vol. 161, issue 1, 38-56

Abstract: This study shows that the effects of judgment proofness on precaution depend on whether the injurer can reduce the probability of the accident, the magnitude of the harm, or both. Different legal solutions to the problem are examined: punitive damages, average compensation, undercompensation, accurate compensation, and negligence. We find that when the injurer can only reduce the probability of the accident, negligence with average compensation is the best solution, but negligence with perfectly compensatory damages is the desirable solution if the injurer can only or also affect the magnitude of the harm.

JEL-codes: K13 K32 (search for similar items in EconPapers)
Date: 2005
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