Judgment Proofness Under Four Different Precaution Technologies
Journal of Institutional and Theoretical Economics, Vol. 161, No. 1, pp. 38-56, March 2005
Tjalling C. Koopmans Research Institute Discussion Paper Series No. 03-16
24 Pages Posted: 27 Dec 2003
This study shows that the effects of judgment proofness on precaution depend on whether the injurer can reduce the probability of the accident, the magnitude of the harm, or both. Different legal solutions to the problem are examined: punitive damages, average compensation, undercompensation, accurate compensation and negligence. We find that when the injurer can only reduce the probability of the accident, negligence with average compensation is the best solution, but negligence with perfectly compensatory damages is the desirable solution if the injurer can only or also affect the magnitude of the harm.
Keywords: Insolvency, judgment proof, liability, bankruptcy
JEL Classification: K13, K32
Suggested Citation: Suggested Citation