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Strict Liability and Negligence with Search for Precautionary Measures

Strict Liability and Negligence with Search for Precautionary Measures This article explores the performance of strict liability and negligence when agents initially have imperfect information about what care options exist to influence expected accidental harm. A technology that establishes a basic level of care is commonly known in our framework, but whether a superior one exists is uncertain. Injurers and/or victims can engage in a costly search to find out. For this setup, we show that strict liability can induce lower social costs than negligence when the superior care technology’s existence is moderately likely and agents’ search costs are high, a combination likely to apply to new and complex activities. Instead, negligence is socially preferred when the superior care technology’s existence is either very likely or very unlikely, or when search costs are low, configurations likely to apply to well-established activities. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png American Law and Economics Review Oxford University Press

Strict Liability and Negligence with Search for Precautionary Measures

American Law and Economics Review , Volume 23 (2): 41 – Nov 9, 2021

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Publisher
Oxford University Press
Copyright
© The Author 2021. Published by Oxford University Press on behalf of the American Law and Economics Association. All rights reserved. For permissions, please e-mail: journals.permissions@oup.com
ISSN
1465-7252
eISSN
1465-7260
DOI
10.1093/aler/ahab009
Publisher site
See Article on Publisher Site

Abstract

This article explores the performance of strict liability and negligence when agents initially have imperfect information about what care options exist to influence expected accidental harm. A technology that establishes a basic level of care is commonly known in our framework, but whether a superior one exists is uncertain. Injurers and/or victims can engage in a costly search to find out. For this setup, we show that strict liability can induce lower social costs than negligence when the superior care technology’s existence is moderately likely and agents’ search costs are high, a combination likely to apply to new and complex activities. Instead, negligence is socially preferred when the superior care technology’s existence is either very likely or very unlikely, or when search costs are low, configurations likely to apply to well-established activities.

Journal

American Law and Economics ReviewOxford University Press

Published: Nov 9, 2021

Keywords: K13

References