original papers: Safety regulation and monitor liability
Ulrich Hege () and
Eberhard Feess ()
Review of Economic Design, 2002, vol. 7, issue 2, 173-185
We propose a simple liability rule when several agents are jointly responsible for monitoring a risky economic activity or certifying its security. Examples are safety controls for drugs or technical systems, environmental liability, or air safety accidents. The agents have private knowledge of their monitoring or avoidance costs. We adopt a mechanism design approach to ensure optimal monitoring incentives. Our innovation is to focus on information that is available or can be proxied when harm has occurred and when typically regulators and/or courts deliberate over fines and damages. By contrast, earlier proposals require more estimations of hypothetical accident scenarios and their ex ante probabilities. We argue that our rule promises substantial savings in information costs for courts and regulators and excludes likely sources of errors.
Keywords: Safety regulation; multiple monitors; Bayesian mechanism (search for similar items in EconPapers)
JEL-codes: K13 H41 (search for similar items in EconPapers)
Note: Received: 11 October 2000 / Accepted: 14 September 2001
References: Add references at CitEc
Citations: View citations in EconPapers (2) Track citations by RSS feed
Downloads: (external link)
Access to the full text of the articles in this series is restricted
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:spr:reecde:v:7:y:2002:i:2:p:173-185
Ordering information: This journal article can be ordered from
Access Statistics for this article
Review of Economic Design is currently edited by Atila Abdulkadiroglu, Fuhito Kojima and Tilman Börgers
More articles in Review of Economic Design from Springer, Society for Economic Design
Bibliographic data for series maintained by Sonal Shukla ().