The Robustness Case for Proportional Liability

14 The B.E. Journal of Theoretical Economics 371 (2014)

UCLA School of Law, Law-Econ Research Paper No. 14-06

27 Pages Posted: 7 Apr 2014 Last revised: 17 Sep 2015

Alexander Stremitzer

UCLA School of Law

Avraham D. Tabbach

Tel Aviv University

Date Written: April 7, 2014

Abstract

In important areas like medical malpractice and environmental torts, injurers are potentially insolvent and courts may make errors in determining liability (e.g. due to hindsight bias). We show that proportional liability, which holds a negligent injurer liable for harm discounted with the probability that the harm was caused by the injurer’s negligence, is less susceptible to these imperfections and therefore socially preferable to all other liability rules currently contemplated by courts. We also provide a result which might be useful to regulators when calculating minimum capital requirements or minimum mandatory insurance for different industries.

Keywords: compliance, uncertain causation, court error, judgment-proof problem, proportional liability

JEL Classification: K13

Suggested Citation

Stremitzer, Alexander and Tabbach, Avraham D., The Robustness Case for Proportional Liability (April 7, 2014). 14 The B.E. Journal of Theoretical Economics 371 (2014); UCLA School of Law, Law-Econ Research Paper No. 14-06. Available at SSRN: https://ssrn.com/abstract=2422042

Alexander Stremitzer (Contact Author)

UCLA School of Law ( email )

405 Hilgard Avenue
Box 90095-1476
Los Angeles, CA 90095-1476
United States

HOME PAGE: http://www.law.ucla.edu/faculty/all-faculty-profiles/professors/Pages/Alexander-Stremitzer.aspx

Avraham D. Tabbach

Tel Aviv University ( email )

Ramat Aviv
Tel Aviv 69978, IL
Israel

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