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Tailoring Negligence Standards to Accident Records

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  • Guerra, Alice
  • Hlobil, Tobias M.

Abstract

Traditional economic models of accident law are static and assume homogeneous individuals under perfect information. This paper relaxes these assumptions and presents a dynamic unilateral accident model in which potential injurers differ in their probability of accident. Information about individual risk-type is hidden from the social planner and from each potential injurer. We ask how negligence standards should be optimally tailored to individual risk-type when this is imperfectly observable. We argue that information about past accident experiences helps to efficiently define negligence standards, narrowing the distance between first-best standards perfectly tailored to individual risk-type and third-best averaged standards. We finally show that negligence standards refined on the basis of past accident experiences and of individual risk-type do not undermine private incentives to undertake due care.

Suggested Citation

  • Guerra, Alice & Hlobil, Tobias M., 2015. "Tailoring Negligence Standards to Accident Records," MPRA Paper 66281, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:66281
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    References listed on IDEAS

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    1. Ganuza Juan-Jose & Gomez Fernando, 2006. "Caution, Children Crossing: Heterogeneity of Victim's Cost of Care and the Negligence Rule," Review of Law & Economics, De Gruyter, vol. 1(3), pages 365-397, January.
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    Cited by:

    1. Guerra Alice & Parisi Francesco, 2024. "Are Individual Care Investments Affected by Past Accident Experiences?," Review of Law & Economics, De Gruyter, vol. 20(2), pages 225-266.

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    More about this item

    Keywords

    accident law; individualized negligence standards; negligence; bayesian updating rule;
    All these keywords.

    JEL classification:

    • K10 - Law and Economics - - Basic Areas of Law - - - General (Constitutional Law)
    • K13 - Law and Economics - - Basic Areas of Law - - - Tort Law and Product Liability; Forensic Economics

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