Tort-Fest

Abstract:     
This Article argues that mass torts involving multiple tortfeasors can be welfare-enhancing. It begins by investigating the role of “dilution of liability” — a phenomenon that has been condemned for its role in facilitating accidents. According to this literature, in alternative care situations where the damage to the victim is constant, dilution of liability leads to inefficient precaution levels and consequently to more (bad) accidents. The Article deviates from this literature and shows that dilution of liability can be welfare-enhancing. This is so even in the quintessential case where dilution of liability is universally denounced. The Article further shows that an activity that is socially undesirable and should give rise to liability can become desirable as the number of tortfeasors increases. Put differently, it shows that in some situations an activity that would and should be condemned if conducted by one tortfeasor may become socially desirable if done by many. The Article analyzes the conditions under which such desirable “tortfestivities” occur, and it has important implications to the salience literature. After investigating the impact of tortfestivities on actors’ precaution and activity levels, the Article examines a proposal that would incentivize actors, in certain situations, to join a group wrongdoing or combine with others to initiate one. The result, it is argued, would be to increase societal welfare.

Number of Pages in PDF File: 43

Keywords: tortfest, mass torts, dilution of liability, salience, alternative care, collusion, punitive damages, activity levels, precaution levels, economic analysis

JEL Classification: A12, D20, D61, D72, K13

Accepted Paper Series