Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/94149
Authors: 
Stremitzer, Alexander
Tabbach, Avraham
Year of Publication: 
2009
Series/Report no.: 
SFB/TR 15 Discussion Paper 289
Abstract: 
We analyze liability rules in a setting where injurers are potentially insolvent and where negligence standards may deviate from the socially optimal level. We show that proportional liability, which sets the measure of damages equal to the harm multiplied by the probability that it was caused by an injurer's negligence, is preferable to other existing negligence-based rules. Moreover, proportional liability outperforms strict liability if the standard of due care is not set too low. Our analysis also suggests that courts should rely on statistical evidence and bar individualized causal claims that link the harm suffered by a plaintiff to the actions of the defendant. Finally, we provide a result which might be useful to regulators when calculating minimum capital requirements or minimum mandatory insurance for different industries.
Subjects: 
judgment proof problem
uncertain causation
court error and misperception
proportional liability
disgorgement
JEL: 
K13
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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