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.
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.
LanguageEnglish
Place of PublicationMünchen
PublisherMunich Personal RePEc Archive
Number of pages16
DOIs
StatePublished - 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. München: Munich Personal RePEc Archive. MPRA Paper, No. 66281, DOI: 10.2139/ssrn.2650823
Guerra, Alice ; Hlobil, Tobias M./ Tailoring Negligence Standards to Accident Records. München : Munich Personal RePEc Archive, 2015. (MPRA Paper; No. 66281).
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Guerra, A & Hlobil, TM 2015 'Tailoring Negligence Standards to Accident Records' Munich Personal RePEc Archive, München. DOI: 10.2139/ssrn.2650823

Tailoring Negligence Standards to Accident Records. / Guerra, Alice; Hlobil, Tobias M.

München : Munich Personal RePEc Archive, 2015.

Research output: Working paperResearch

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Guerra A, Hlobil TM. Tailoring Negligence Standards to Accident Records. München: Munich Personal RePEc Archive. 2015 Aug 10. Available from, DOI: 10.2139/ssrn.2650823