Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/190321
Authors: 
Friehe, Tim
Rössler, Christoph
Dong, Xiaoge
Year of Publication: 
2018
Series/Report no.: 
ILE Working Paper Series 20
Abstract: 
This paper analyzes the workings of liability when harm-inflicting consumers are present biased and both product safety and consumer care influence expected harm. We show that present bias introduces a rationale for shifting some losses onto the manufacturer, in stark contrast with the baseline scenario in which strict consumer liability induces socially optimal product safety and precaution levels. In addition, we establish that strict liability with contributory negligence may induce socially optimal product safety and precaution choices without aggravating the output level distortion.
Subjects: 
Liability
Present Bias
Product Safety
Consumer Precaution
JEL: 
D91
H23
K13
Document Type: 
Working Paper
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