Social Wealth and Optimal Care

36 Pages Posted: 29 Jun 2008 Last revised: 26 Feb 2012

See all articles by Giuseppe Dari‐Mattiacci

Giuseppe Dari‐Mattiacci

University of Amsterdam; Tinbergen Institute

Eric Langlais

EconomiX, CNRS & University of Paris Ouest

Date Written: September 3, 2009


When accidents result in noncompensable losses, a monetary payment is not enough to compensate the victim. We study the characteristics of optimal levels of care and distribution of risk under these circumstances and show that care depends on the aggregate wealth of society but does not depend on wealth distribution. We then examine whether ordinary liability rules, regulation, insurance, taxes and subsidies can be used to implement the first-best outcome (in terms of both care and risk). Finally, our results are discussed in the light of fairness considerations (second best) and in the special case of accidents between individuals and a firm.

Keywords: accidents, risk, wealth, care, bodily injury

JEL Classification: K13

Suggested Citation

Dari-Mattiacci, Giuseppe and Langlais, Eric, Social Wealth and Optimal Care (September 3, 2009). International Review of Law and Economics, Forthcoming, Amsterdam Center for Law & Economics Working Paper No. 2008-05, Available at SSRN: or

Giuseppe Dari-Mattiacci (Contact Author)

University of Amsterdam ( email )

Postbus 15654
1001 ND
Amsterdam, Noord-Holland 1001 ND

Tinbergen Institute ( email )

Burg. Oudlaan 50
Rotterdam, 3062 PA

Eric Langlais

EconomiX, CNRS & University of Paris Ouest ( email )

200 Avenue de la République
Nanterre, 92200


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