The Robustness Case for Proportional Liability
UCLA School of Law
Avraham D. Tabbach
Tel Aviv University
April 7, 2014
14 The B.E. Journal of Theoretical Economics 371 (2014)
UCLA School of Law, Law-Econ Research Paper No. 14-06
In important areas like medical malpractice and environmental torts, injurers are potentially insolvent and courts may make errors in determining liability (e.g. due to hindsight bias). We show that proportional liability, which holds a negligent injurer liable for harm discounted with the probability that the harm was caused by the injurer’s negligence, is less susceptible to these imperfections and therefore socially preferable to all other liability rules currently contemplated by courts. We also provide a result which might be useful to regulators when calculating minimum capital requirements or minimum mandatory insurance for different industries.
Number of Pages in PDF File: 27
Keywords: compliance, uncertain causation, court error, judgment-proof problem, proportional liability
JEL Classification: K13
Date posted: April 7, 2014 ; Last revised: September 17, 2015
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