Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/62616 
Year of Publication: 
2008
Series/Report no.: 
Working Paper No. 2008-9
Publisher: 
Brown University, Department of Economics, Providence, RI
Abstract: 
A growing body of literature suggests that courts and juries are inclined toward division of liability between two strictly non-negligent or 'vigilant' parties. However, standard models of liability rules do not provide for vigilance-based sharing of liability. In this paper, we explore the economic efficiency of liability rules based on comparative vigilance. We devise liability rules that are efficient and that reward vigilance exhibited by the parties. It is commonly believed that discontinuous liability shares are necessary for efficiency, but we develop a liability rule that is both efficient and continuous, based on comparative negligence when both parties are negligent and on comparative vigilance when both parties are vigilant. Moreover, our rule divides accident losses into two parts: one part creates incentives for efficiency; the other part provides equity.
Subjects: 
comparative vigilance
equity
economic efficiency
tort liability rules
Nash equilibrium
social costs
pure comparative vigilance
super-symmetric rule
JEL: 
K13
D61
Document Type: 
Working Paper

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