Tailoring Negligence Standards to Accident Records

Guerra, Alice and Hlobil, Tobias M. (2015): Tailoring Negligence Standards to Accident Records. Published in: Journal of Legal Studies , Vol. 47, No. 2 (June 2018): pp. 325-348.

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.

• Item Type: MPRA Paper
• Language: English
• Keywords: accident law, individualized negligence standards, negligence, bayesian updating rule
• Subjects: K - Law and Economics > K1 - Basic Areas of Law > K10 - General; K - Law and Economics > K1 - Basic Areas of Law > K13 - Tort Law and Product Liability ; Forensic Economics

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