Tailoring Negligence Standards to Accident Records

Alice Guerra, Tobias M. Hlobil

Research output: Working paperResearch

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.
Original languageEnglish
Place of PublicationMünchen
PublisherMunich Personal RePEc Archive
Number of pages16
DOIs
Publication statusPublished - 10 Aug 2015
Externally publishedYes
SeriesMPRA Paper
Number66281

Keywords

  • Accident law
  • Individualized negligence standards
  • Negligence
  • Bayesian updating rule

Cite this

Guerra, A., & Hlobil, T. M. (2015). Tailoring Negligence Standards to Accident Records. Munich Personal RePEc Archive. MPRA Paper, No. 66281 https://doi.org/10.2139/ssrn.2650823