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Shared Liability and Excessive Care

Author

Listed:
  • Ehud Guttel
  • Yuval Procaccia
  • Eyal Winter
Abstract
Extensive literature has shown that assignment of liability for a single harm to multiple injurers undermines incentives for optimal care. As each potential injurer anticipates bearing only a fraction of the harm, incentives to take precautions are often diluted. The dilution-of-liability concern has led theorists to propose sophisticated apportionment rules to restore optimal incentives. This article demonstrates, however, that shared liability also gives rise to the converse risk, namely, it induces injurers—whether subject to negligence or strict liability—to invest excessively in care. Furthermore, unlike its extensively analyzed counterpart, the risk of excessive care arises under any apportionment regime. While apportionment rules cannot eliminate the problem of excessive care, we suggest other means by which the problem can be addressed (JEL D62, D86, K13).

Suggested Citation

  • Ehud Guttel & Yuval Procaccia & Eyal Winter, 2021. "Shared Liability and Excessive Care," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 37(2), pages 358-391.
    • Handle: RePEc:oup:jleorg:v:37:y:2021:i:2:p:358-391.
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    File URL: http://hdl.handle.net/10.1093/jleo/ewaa016
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    Citations

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    Cited by:

    1. Marie Obidzinski & Yves Oytana, 2022. "Advisory algorithms and liability rules," Working Papers 2022-04, CRESE.
    2. Marie Obidzinski & Yves Oytana, 2022. "Prediction, human decision and liability rules, CRED Working paper No 2022-06," Working Papers hal-04034871, HAL.

    More about this item

    JEL classification:

    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law
    • K13 - Law and Economics - - Basic Areas of Law - - - Tort Law and Product Liability; Forensic Economics

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