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Disappearing Defendants Versus Judgment-Proof Injurers


Giuseppe Dari-Mattiacci


University of Amsterdam - Amsterdam Center for Law and Economics (ACLE); Tinbergen Institute

Barbara Mangan


Utrecht University - Utrecht University School of Economics; Compuware B.V


Economica, Vol. 75, No. 300, pp. 749-765, November 2008
George Mason Law & Economics Research Paper No. 05-01

Abstract:     
In this paper, we analyze two ways in which liability can be reduced: caps (the judgment proof problem) versus proportional reductions (the disappearing defendant problem). We show that these two problems have different incentive effects and hence yield dissimilar levels of social welfare. Moreover, when they occur simultaneously, they may have offsetting effects. We also show that the negligence rule with cause-in-fact may yield lower (rather than greater) levels of social welfare than strict liability. Finally, we analyze the optimal setting of the negligence standard. Our model encompasses different precaution technologies as well as monetary vs. non-monetary precautions.

Number of Pages in PDF File: 27

Keywords: insolvency, judgment proof, strict liability, negligence, disappearing defendant

JEL Classification: K13, K32

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Date posted: February 3, 2005 ; Last revised: April 7, 2011

Suggested Citation

Dari-Mattiacci, Giuseppe and Mangan, Barbara, Disappearing Defendants Versus Judgment-Proof Injurers. Economica, Vol. 75, No. 300, pp. 749-765, November 2008; George Mason Law & Economics Research Paper No. 05-01. Available at SSRN: http://ssrn.com/abstract=660743 or http://dx.doi.org/10.2139/ssrn.660743

Contact Information

Giuseppe Dari-Mattiacci (Contact Author)
University of Amsterdam - Amsterdam Center for Law and Economics (ACLE) ( email )
Roeterstraat 11
Amsterdam, 1018WB
Netherlands
HOME PAGE: http://darimattiacci.acle.nl
Tinbergen Institute
Roetersstraat 31
Amsterdam, 1018 WB
Netherlands
HOME PAGE: http://scholar.google.com/citations?user=AuUfjxUAAAAJ&hl=en
Barbara Mangan
Utrecht University - Utrecht University School of Economics ( email )
Kriekenpitplein 21-22
Adam Smith Building
Utrecht, 3584 EC
Netherlands
Compuware B.V
Hoogoorddreef 5
Bereken Route
1101 BA Amsterdam
Netherlands
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