Negligence, Strict Liability and Collective Action

22 Pages Posted: 4 Aug 2010

See all articles by David Gilo

David Gilo

Tel Aviv University - Buchmann Faculty of Law

Ehud Guttel

Hebrew University of Jerusalem - Faculty of Law

Erez Yuval

Ecological Finance

Multiple version iconThere are 2 versions of this paper

Date Written: August 3, 2010

Abstract

Conventional wisdom in law and economics has long been that negligence-based regimes induce optimal care but encourage excessive activity. This paper demonstrates that when behavior involves multiple victims or injurers, negligence-based regimes can create a collective action problem which results in sub-optimal care and insufficient activity. As we show, investments in effective precaution often become cost-justified only when multiple parties engage in high activity levels. If parties are not coordinated, however, each may choose a low activity level to minimize her risk of harm. This collective action problem provides several insights for policymakers and legislatures regarding the design of optimal liability rules. It sheds new light on the efficiency of applying negligence, strict liability, or a combination of these two regimes; presents an overlooked virtue of damage caps and negligence per-se rules; and justifies doctrines that limit joint tortfeasors’ exposure to liability.

Keywords: Negligence, Strict liability, Level of care, Level of activity, Joint tortfeasors, Coordination problem, Collective Action

Suggested Citation

Gilo, David and Guttel, Ehud and Yuval, Erez, Negligence, Strict Liability and Collective Action (August 3, 2010). Available at SSRN: https://ssrn.com/abstract=1652906 or http://dx.doi.org/10.2139/ssrn.1652906

David Gilo

Tel Aviv University - Buchmann Faculty of Law ( email )

Ramat Aviv
Tel Aviv 69978, IL
Israel
+972-3-6406299 (Phone)

Ehud Guttel (Contact Author)

Hebrew University of Jerusalem - Faculty of Law ( email )

Mount Scopus
Mount Scopus, IL 91905
Israel

Erez Yuval

Ecological Finance ( email )

Israel

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