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Nash Implementable Liability Rules for Judgement-Proof Injurers

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  • Patrick González

Abstract

I provide a complete characterization of Nash implementable allocations of spending in prevention by judgement-proof injurers. This characterization is used to identify the optimal rule that allows for the maximum total spending in prevention. The optimal rule amounts to apply the negligence rule to the deep-pocket (or the victim), that is the injurer who responds the most to monetary incentives under the strict liability rule, and the strict liability rule to everybody else. Je développe une caractérisation complète des allocations de dépenses en prévention par des justiciables à la responsabilité limitée pouvant être mises en place en équilibre de Nash. Cette caractérisation est employée afin d'identifier la règle optimale permettant un maximum de dépenses en prévention. La règle optimale se résume à appliquer la règle de négligence au plus riche (le «deep-pocket» ou la «victime», selon l'interprétation), soit le justiciable qui répond le mieux aux incitations monétaires sous la règle de négligence, et la règle de responsabilité stricte à tous les autres.

Suggested Citation

  • Patrick González, 2004. "Nash Implementable Liability Rules for Judgement-Proof Injurers," CIRANO Working Papers 2004s-58, CIRANO.
    • Handle: RePEc:cir:cirwor:2004s-58
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    File URL: https://cirano.qc.ca/files/publications/2004s-58.pdf
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    References listed on IDEAS

    as
    1. Steven Shavell, 2003. "Economic Analysis of Accident Law," NBER Working Papers 9483, National Bureau of Economic Research, Inc.
    2. Bergstrom, Ted C. & Blume, Larry & Varian, Hal, 1992. "Uniqueness of Nash equilibrium in private provision of public goods : An improved proof," Journal of Public Economics, Elsevier, vol. 49(3), pages 391-392, December.
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    5. Shavell, S., 1986. "The judgment proof problem," International Review of Law and Economics, Elsevier, vol. 6(1), pages 45-58, June.
    6. Winand Emons & Joel Sobel, 1991. "On the Effectiveness of Liability Rules when Agents are not Identical," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 58(2), pages 375-390.
    7. Kornhauser, Lewis A & Revesz, Richard L, 1994. "Multidefendant Settlements under Joint and Several Liability: The Problem of Insolvency," The Journal of Legal Studies, University of Chicago Press, vol. 23(1), pages 517-542, January.
    8. Kornhauser, Lewis A. & Revesz, Richard L., 1989. "Apportioning Damages Among Potentially Insolvent Actors," Working Papers 89-22, C.V. Starr Center for Applied Economics, New York University.
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    More about this item

    Keywords

    negligence rule; limited liability; multiple injurers; Nash implementation; règle de négligence; responsabilité limitée; multiples justiciables; mise en place en équilibre de Nash;
    All these keywords.

    JEL classification:

    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • K13 - Law and Economics - - Basic Areas of Law - - - Tort Law and Product Liability; Forensic Economics

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