Tailoring Negligence Standards to Accident Records

Alice Guerra and Tobias Hlobil

MPRA Paper from University Library of Munich, Germany

Abstract: Traditional economic models of accident law are static and assume homogeneous individuals under perfect information. This paper relaxes these assumptions and presents a dynamic unilateral accident model in which potential injurers differ in their probability of accident. Information about individual risk-type is hidden from the social planner and from each potential injurer. We ask how negligence standards should be optimally tailored to individual risk-type when this is imperfectly observable. We argue that information about past accident experiences helps to efficiently define negligence standards, narrowing the distance between first-best standards perfectly tailored to individual risk-type and third-best averaged standards. We finally show that negligence standards refined on the basis of past accident experiences and of individual risk-type do not undermine private incentives to undertake due care.

Keywords: accident law; individualized negligence standards; negligence; bayesian updating rule (search for similar items in EconPapers)
JEL-codes: K10 K13 (search for similar items in EconPapers)
Date: 2015-08-10
New Economics Papers: this item is included in nep-ger and nep-law
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Published in Journal of Legal Studies 2.47(2018): pp. 325-348

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https://mpra.ub.uni-muenchen.de/66281/1/MPRA_paper_66281.pdf original version (application/pdf)

Related works:
Journal Article: Tailoring Negligence Standards to Accident Records (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:66281

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