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Springer Gabler - VWL | Precaution Incentives in Accident Settings

Precaution Incentives in Accident Settings

Friehe, Tim

2008, XIV, 189 p.

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One central function of tort law is the inducement of precaution incentives. This is particularly welcome in settings in which the internalization of interdependencies between individuals relating to care and expected harm would otherwise not take effect due to high transaction costs broadly conceived, accident settings being a prime example.

Tim Friehe analyzes important aspects for the design of tort law which intends to induce optimal individual choices and possible limitations of workable tort law in varied settings. Incentives to take precaution, which affect the accident probability and/or the magnitude of the harm in the event of an accident, are of primary interest in this context. After providing an extensive review of the literature relating to the economic analysis of tort law, the author goes on to discuss the consequences of victims with different harm levels. In particular, using average harm as a compensation measure in order to save administrative costs is considered and a scheme to make the revelation of the individual harm level incentive-compatible is devised. Furthermore, the book contributes to the ongoing discussion on the effects of judgment proofness and the distinction between unilateral harm and bilateral harm accidents. Finally, the author highlights the consequences of the consideration of hitherto neglected behavioral dimensions for the conclusions of the economic analysis of tort law.

Content Level » Research

Keywords » Care incentives - Liability - Risk Aversion - Tort Law - law and economics - transaction cost

Related subjects » VWL

Table of contents 

The Economics of Tort Law: Basics and Selected Core Themes; Incentive Effects of Damage Averaging in Tort Law; Superiority of Damage Averaging in the Case of Strict Liability; Screening Accident Victims; Judgment Proofness and Risk Aversion; Similarity of Bilateral Harm and Unilateral Harm with Role-Type Uncertainty; Avoidance Activities after Accidents

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