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Nash Implementable Liability Rules for Judgement-Proof Injurers

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  • González, Patrick

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.

Suggested Citation

  • González, Patrick, 2004. "Nash Implementable Liability Rules for Judgement-Proof Injurers," Cahiers de recherche 0403, Université Laval - Département d'économique.
    • Handle: RePEc:lvl:laeccr:0403
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    File URL: http://www.ecn.ulaval.ca/w3/recherche/cahiers/2004/0403.pdf
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    References listed on IDEAS

    as
    1. Steven Shavell, 2003. "Economic Analysis of Accident Law," NBER Working Papers 9694, 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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    More about this item

    Keywords

    Negligence rule; limited liability; multiple injurers; Nash implementation;
    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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