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Liability for third-party harm when harm-inflicting consumers are present biased

Tim Friehe, Christoph Rössler and Xiaoge Dong ()

No 20, ILE Working Paper Series from University of Hamburg, Institute of Law and Economics

Abstract: This paper analyzes the workings of liability when harm-inflicting consumers are present biased and both product safety and consumer care influence expected harm. We show that present bias introduces a rationale for shifting some losses onto the manufacturer, in stark contrast with the baseline scenario in which strict consumer liability induces socially optimal product safety and precaution levels. In addition, we establish that strict liability with contributory negligence may induce socially optimal product safety and precaution choices without aggravating the output level distortion.

Keywords: Liability; Present Bias; Product Safety; Consumer Precaution (search for similar items in EconPapers)
JEL-codes: D91 H23 K13 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-law and nep-mic
Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ilewps:20

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