Negligence, Strict Liability and Collective Action

22 Pages Posted: 14 Oct 2012

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: May 3, 2012

Abstract

An injurer's activity often exposes multiple victims to the risk of harm. We show that under negligence, the tort system's dominant regime, such victims face a collective-action problem in choosing their activity levels. An increase in one victim's activity level confers a positive externality on the other victims because it requires the injurer to take more care. Victims will accordingly choose lower activity levels than those they would choose if they acted collectively. Interestingly, depending on the efficiency of the injurer's precautions, victims' failure to coordinate can either increase or decrease social welfare. We discuss the implications of our analysis for nuisance disputes, the desirability of reimbursement rules, and the efficiency of insurance.

Keywords: negligence, collective action, multiple victims, multiple injurers, economies of scale, continuous precaution, fixed-cost precaution, insurance, nuisance

JEL Classification: K13, D62, D7

Suggested Citation

Gilo, David and Guttel, Ehud and Yuval, Erez, Negligence, Strict Liability and Collective Action (May 3, 2012). Available at SSRN: https://ssrn.com/abstract=2161257 or http://dx.doi.org/10.2139/ssrn.2161257

David Gilo (Contact Author)

Tel Aviv University - Buchmann Faculty of Law ( email )

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

Ehud Guttel

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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