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The B.E. Journal of Theoretical Economics

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The Robustness Case for Proportional Liability

Alexander Stremitzer
  • Corresponding author
  • UCLA School of Law, 385 Charles E. Young Drive, East, 1242 Law Building, Los Angeles, CA 90095-1476, USA
  • Email:
/ Avraham D. Tabbach
  • Faculty of Law, Tel-Aviv University, Ramat-Aviv, Tel Aviv 69978, Israel
  • Email:
Published Online: 2014-01-11 | DOI: https://doi.org/10.1515/bejte-2012-0013

Abstract

In important areas like medical malpractice and environmental torts, injurers are potentially insolvent and courts may make errors in determining liability (e.g. due to hindsight bias). We show that proportional liability, which holds a negligent injurer liable for harm discounted with the probability that the harm was caused by the injurer’s negligence, is less susceptible to these imperfections and therefore socially preferable to all other liability rules currently contemplated by courts. We also provide a result which might be useful to regulators when calculating minimum capital requirements or minimum mandatory insurance for different industries.

Keywords: compliance; uncertain causation; court error; judgment-proof problem; proportional liability

JEL Classification: K13

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About the article

Published Online: 2014-01-11

Published in Print: 2014-01-01


Citation Information: The B.E. Journal of Theoretical Economics, ISSN (Online) 1935-1704, ISSN (Print) 2194-6124, DOI: https://doi.org/10.1515/bejte-2012-0013. Export Citation

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