Judgment Proofness Under Four Different Precaution Technologies
University of Amsterdam - Amsterdam Center for Law and Economics (ACLE); Tinbergen Institute
Gerrit De Geest
Washington University in Saint Louis - School of Law
Journal of Institutional and Theoretical Economics, Vol. 161, No. 1, pp. 38-56, March 2005
George Mason Law & Economics Research Paper No. 04-03
Tjalling C. Koopmans Research Institute Discussion Paper Series No. 03-16
This study shows that the effects of judgment proofness on precaution depend on whether the injurer can reduce the probability of the accident, the magnitude of the harm, or both. Different legal solutions to the problem are examined: punitive damages, average compensation, undercompensation, accurate compensation and negligence. We find that when the injurer can only reduce the probability of the accident, negligence with average compensation is the best solution, but negligence with perfectly compensatory damages is the desirable solution if the injurer can only or also affect the magnitude of the harm.
Number of Pages in PDF File: 24
Keywords: Insolvency, judgment proof, liability, bankruptcy
JEL Classification: K13, K32
Date posted: December 27, 2003
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