Accident Law: An Excessive Standard May Be Efficient

13 Pages Posted: 25 Jan 2002

See all articles by Laszlo Goerke

Laszlo Goerke

University of Trier - Institute of Labour Law and Industrial Relations in the European Union; CESifo (Center for Economic Studies and Ifo Institute); IZA Institute of Labor Economics

Date Written: December 2001

Abstract

In a world with risk-neutral agents, liability rules will only induce efficient behavior if these rules impose the full (marginal) costs of an action on the parties. However, institutional restrictions or bilateral activity choices can prevent the full internalization of costs. A mechanism is proposed which guarantees an efficient outcome: monetary fines which are not related to the occurrence of an accident. Such a mechanism requires individuals to violate the standard of care in order to trigger fine payments. Hence, efficiency needs an excessive standard.

Keywords: Accident Law, Activity, Care, Efficiency, Fines, Standards of Care, Tort Law

JEL Classification: K13, K42

Suggested Citation

Goerke, Laszlo, Accident Law: An Excessive Standard May Be Efficient (December 2001). Available at SSRN: https://ssrn.com/abstract=296238

Laszlo Goerke (Contact Author)

University of Trier - Institute of Labour Law and Industrial Relations in the European Union ( email )

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Trier, 54296
Germany

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CESifo (Center for Economic Studies and Ifo Institute)

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Munich, DE-81679
Germany

IZA Institute of Labor Economics

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Bonn, D-53072
Germany

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