Errors and the Functioning of Tort Liability
University of Amsterdam - Amsterdam Center for Law & Economics (ACLE); Tinbergen Institute
George Mason University Law & Economics, Research Paper Series No. 3-40
Supreme Court Economic Review, Vol. 13, No. , 2005
The correct functioning of liability may be plagued by error in determining damages and in setting due care. This paper revises the literature on the topic and makes a distinction between those situations in which these two types of errors occur irrespective of each other and those in which they occur jointly. Three liability rules are considered: strict liability, the standard version of simple negligence without causation rule and the Grady-Kahan model of simple negligence with causation rule. It is shown that these liability rules perform differently only if the two types of errors occur separately. If they occur jointly, all liability rules yield the same equilibrium level of precaution.
Number of Pages in PDF File: 25
Keywords: tort, negligence, strict liability, causation
JEL Classification: K13
Date posted: September 17, 2003
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