Economic Analysis of Accident Law

Title Page......Page 4
Preface......Page 6
Contents......Page 8
Use of Models to Examine Two Types of Theoretical Questions......Page 12
Organization of the Book......Page 14
2 / Liability and Deterrence: Basic Theory......Page 16
2.1 Levels of Care the Only Determinant of Risk: Unilateral Accidents......Page 17
2.2 Levels of Care the Only Determinant of Risk: Bilateral Accidents......Page 20
2.3 Levels of Care and Levels of Activity the Determinants of Risk: Unilateral Accidents......Page 32
2.4 Levels of Care and Levels of Activity the Determinants of Risk: Bilateral Accidents......Page 37
Mathematical Appendix......Page 43
2A.1 Levels of Care the Only Determinant of Risk......Page 44
2A.2 Levels of Care and Levels of Activity the Determinants of Risk......Page 52
3 / Liability of Firms......Page 58
3.1 The Case Where Victims Are Strangers to Firms......Page 59
3.2 The Case Where Victims Are Customers of Firms......Page 62
Mathematical Appendix......Page 75
3A.1 The Case Where Victims Are Strangers to Firms......Page 76
3A.2 The Case Where Victims Are Customers of Firms......Page 77
4.1 Differences among Parties......Page 84
4.2 Prior Precautions......Page 88
4.3 Uncertainty, Error, and Misperception......Page 90
4.4 Implications of Findings of Negligence......Page 94
4A.1 Differences among Parties......Page 97
4A.2 Prior Precautions......Page 102
4A.3 Uncertainty, Error, and Misperception......Page 104
4A.4 Implications of Findings of Negligence......Page 110
5.1 Accidents Caused by Injurers......Page 116
5.2 Coincidental Accidents......Page 121
5.3 Uncertainty over Causation......Page 126
Mathematical Appendix......Page 129
5A.1 Necessary Causation......Page 130
5A.2 Coincidence......Page 132
5A.3 Uncertainty over Causation......Page 134
6.1 The Level of Losses......Page 138
6.2 The Probability of Losses......Page 139
6.3 Courts' Uncertainty about the Level of Losses......Page 142
6.4 Pecuniary versus Nonpecuniary Losses......Page 144
6.5 Economic Losses......Page 146
6.6 Particularistic Elements in the Computation of Liability......Page 151
6.7 Victims' Opportunities to Mitigate Losses......Page 155
6.8 Liability in Excess of Losses......Page 157
6A.1 The Level and Probability of Losses and Courts' Uncertainty about the Level of Losses......Page 162
6A.2 Pecuniary versus Nonpecuniary Losses......Page 164
6A.3 Economic Losses......Page 165
6A.4 Particularistic Elements in the Computation of Liability......Page 167
6A.5 Victims' Opportunities to Mitigate Losses......Page 169
6A.6 Liability in Excess of Losses......Page 170
7.1 Multiple Injurers......Page 175
7.2 Injurers' Inability to Pay for Losses......Page 178
7.3 Vicarious Liability......Page 181
7.4 Limited Liability of Shareholders for Losses Caused by Corporations......Page 186
7A.1 Multiple Injurers......Page 188
7A.2 Injurers' Inability to Pay for Losses......Page 190
7A.3 Vicarious Liability......Page 193
8.1 Risk Aversion and the Allocation of Risk......Page 197
8.2 The Theory of Insurance......Page 203
8A.1 The Optimal Allocation of Risk......Page 210
8A.2 The Theory of Insurance......Page 213
9.1 Risk Aversion and the Socially Ideal Solution to the Accident Problem......Page 217
9.3 The Accident Problem Given Liability Alone......Page 219
9.4 The Accident Problem Given Liability and Insurance......Page 221
9A.1 The Socially Ideal Solution to the Accident Problem......Page 226
9A.2 The Accident Problem in the Absence of Liability......Page 228
9A.3 The Accident Problem Given Liability Alone......Page 229
9A.4 The Accident Problem Given Liability and Insurance......Page 233
10.1 Nonpecuniary Losses and Insurance......Page 239
10.2 Awards Optimal for Compensation versus Awards Optimal for Deterrence......Page 242
10.3 Victims' Collateral Insurance Benefits and Injurers' Liability......Page 246
10.4 Injurers' Inability to Pay and Liability Insurance......Page 251
10.5 Structure of a System of Pure Accident Insurance......Page 254
10A.l Nonpecuniary Losses and Insurance......Page 256
10A.2 Awards Optimal for Compensation versus Awards Optimal for Deterrence......Page 258
10A.3 Victims' Collateral Insurance Benefits and Injurers' Liability......Page 266
10A.4 Injurers' Inability to Pay and Liability Insurance......Page 268
10A.5 Optimal Insurance and Causation......Page 271
11.1 Factors Determining Administrative Costs......Page 273
11.2 The Private Motive to Make Claims versus Their Social Desirability......Page 276
llA.l Formula Determining Total Administrative Costs......Page 281
llA.2 The Private Motive to Make Claims versus Their Social Desirability......Page 282
12.1 The Different Approaches to the Control of Risk......Page 288
12.2 Factors Bearing on the Appeal of Ex Ante versus Ex Post Approaches......Page 290
12.3 Factors Bearing on the Desirability of Privately Initiated versus State-Initiated Approaches......Page 294
12.4 Factors Bearing on the Appeal of Nonmonetary, Criminal Sanctions......Page 295
12.5 Concluding Observations......Page 296
12A.1 The Model......Page 297
12A.2 Behavior under the Different Approaches......Page 298
Predictive and Normative Analysis......Page 302
Purpose and Future of Accident Liability......Page 308
References......Page 310
Index......Page 318