Journal Article

Innovative Negligence Rules

Giuseppe Dari-Mattiacci and Luigi Alberto Franzoni

in American Law and Economics Review

Volume 16, issue 2, pages 333-365
Published in print December 2014 | ISSN: 1465-7252
Published online January 2014 | e-ISSN: 1465-7260 | DOI: http://dx.doi.org/10.1093/aler/aht021
Innovative Negligence Rules

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Often, injurers or victims (or both) can adopt a new technology that reduces the social costs of accidents. When adoption costs are not verifiable in court, optimal adoption decisions cannot be induced by means of an appropriate determination of negligence. Hence the parties might either over- or under-adopt. We study how due-care standards should be conditioned on the technology adopted by the parties in order to improve adoption decisions. We demonstrate that standards should be biased upwards or downwards, depending on whether the new technology reduces or increases expected harm.

Keywords: K13; K32

Journal Article.  10292 words.  Illustrated.

Subjects: Tort Law ; Law and Economics

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