American Law and Economics Review, Forthcoming
20 Pages Posted: 17 Jan 2012 Last revised: 15 Oct 2013
Date Written: August 2013
In the standard tort case, the injurer-victim interaction results in harm to the victim. In this paper, we identify and analyze a distinct category of cases – Harm-Benefit (“HB”) cases – in which the injurer-victim interaction, results simultaneously in harm to the victim and benefit to the injurer (or to others). Indeed, in these cases the injurer affirmatively prefers to encounter the victim. In HB cases, which are quite common, standard results about the relative efficiency of different liability rules do not apply. When the benefit to the injurer exceeds the harm to the victim, liability should be imposed, whereas if the harm is larger than the benefit the case for liability becomes much weaker. These conclusions imply, counterintuitively, that it may be more important to impose liability on the non-negligent injurer rather than on the negligent injurer. We study the incentive effects of different liability rules, as well as the restitution rule, in HB cases. Our analysis also sheds new light on the law of takings. And it applies in certain contractual settings. More generally, we take the standard tort model, which focuses on one consequence of the injurer-victim interaction – harm to the victim – and expand it to include other consequences. We focus on benefits, but our framework can also be used to study harms, beyond the harm suffered by the victim.
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