Do Presumptions of Negligence Incentivize Optimal Precautions?

Abstract

In the U.S. and in most other jurisdictions, the burden of producing evidence on a contested issue traditionally falls on plaintiffs. In a tort claim, this de facto creates a presumption of nonnegligence in favor of injurers. In recent times, Europe placed renewed attention on “presumed liability,” which instead creates a presumption of negligence against injurers. In this paper, we analyze the effects of these legal presumptions on parties’ care incentives in the presence of discovery errors. Differently from what was suggested in prior research, we show that legal presumptions do affect primary behavior: presuming that the injurer was (not) negligent strengthens (weakens) his care incentives in situations where the plaintiff faces probatory difficulties. We analyze how these effects should inform the choice of evidence regimes to improve the robustness of liability rules, and to minimize the dilutive effect of imperfect adjudication on the parties’ care incentives.

Keywords: legal presumption; presumed liability; care incentives; discovery errors

JEL Classification: K13, D83