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Social wealth and optimal care

Giuseppe Darri-Mattiacci and Eric Langlais

MPRA Paper from University Library of Munich, Germany

Abstract: Many accidents result in losses that cannot be perfectly compensated by a monetary payment. Moreover, often injurers control the magnitude rather than the probability of accidents. We study the characteristics of optimal levels of care and distribution of risk under these circumstances and show that care depends on the aggregate wealth of society but does not depend on wealth distribution. We then examine whether ordinary liability rules, regulation, insurance, taxes and subsidies can be used to implement the first-best outcome. Finally, our results are discussed in the light of fairness considerations (second best).

Keywords: accidents; risk; wealth; care; bodily injury (search for similar items in EconPapers)
JEL-codes: K13 (search for similar items in EconPapers)
Date: 2008-06-27
New Economics Papers: this item is included in nep-hea, nep-ias and nep-law
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Working Paper: Social Wealth and Optimal Care (2008) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:9418

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