Toward a New Paradigm for Multiple-Victim Torts: The Problem of Victims Heterogeneity

Abstract

Conventional wisdom in tort law holds that an injurer’s negligence, a product design defect, and a victim’s contributory negligence should all be decided by weighing the costs and benefits of the relevant activity. In multiple-victim accidents, the current paradigm maintains that liability should be determined by comparing aggregate costs with aggregate benefits.

However, this aggregate liability paradigm — adopted by courts, scholars and the Restatement (Third) of Torts — fails to account for the natural differences that exist between tort victims. When victims are heterogeneous with regard to their expected harm or costs of precaution — as they typically are in real life — basing liability on aggregate amounts may be incorrect, and generate over-deterrence in some cases and under-deterrence and dilution of liability in other. A new paradigm for liability in multiple-victim torts is, therefore, needed.

This Article suggests a novel and superior liability regime for multiple-victim accidents, which forsakes the traditional economic distinction between precaution costs and expected harm. The new liability regime combines disaggregated liability analyses with indemnification for efficient investment in precautions and a small “bonus,” given as an incentive to exercise efficient care.

On September 20th, 2012, this paper was awarded the Göran Skogh Award for the Most Promising Paper Presented at the 2012 EALE Conference.