PART Ⅰ EFFICIENT LIABILITY RULES 3
1 Strict liability versus negligence&Hans-Bernd Sch？fer and Frank Müller-Langer 3
1.1 Introduction 3
1.2 Unilateral accidents 5
1.2.1 Rule of no liability 6
1.2.2 Negligence 6
1.2.3 Relaxing assumptions 7
1.2.4 Strict liability 10
1.2.5 Relaxing assumptions for strict liability 10
1.2.6 Liability and uncertain legal standards of due care 13
1.3 Bilateral accidents 15
1.3.1 The 'cheapest cost avoider' 16
1.3.2 Rule of no liability 17
1.3.3 Negligence 17
Simple negligence 17
Negligence with the defence of contributory negligence 18
Comparative negligence rule 18
1.3.4 Strict liability 19
Simple strict liability 19
Strict division of losses 19
Strict liability with the defence of contributory negligence 20
Strict liability with the defence of relative negligence 20
1.3.5 Relaxing assumptions 20
1.4 Litigation costs 24
1.5 The decentralisation effect of strict liability and negligence 24
1.6 The information-generating consequence of negligence 27
1.6.1 Negligence generates public information on safety technology 27
1.6.2 Information generated by the negligence rule alleviates principal-agent problems 28
1.7 Strict liability versus negligence if the injurer's wealth is lower than the damage 29
1.8 Liability and contracts 30
1.9 Negligence under the disguise of strict liability,liability for design defects 31
1.10 Multiple tortfeasors 32
1.11 Risk aversion, liability law and insurance 33
1.12 Relaxing behavioural assumptions of rational choice 35
1.13 Comparing strict liability and negligence 36
Bibliography 39
2 Contributory and comparative negligence in the law and economics literature&Mireia Artigot i Golobardes and Fernando Gómez Pomar 46
2.1 Introduction 46
2.2 The world of negligence 47
2.3 Contributory and comparative negligence: concepts and evolution 48
2.3.1 Contributory negligence: origin, development and later trend towards comparative negligence 48
2.3.2 Comparative negligence: pure and modified forms 52
2.4 Incentives to take care 53
2.4.1 Initial literature: contributory negligence and the least-cost avoider 53
2.4.2 Haddock and Curran and Shavell: the equivalence between contributory and comparative negligence 58
2.4.3 Relaxing some of the initial assumptions and moving away from first-best analysis 59
2.4.3.1 Evidentiary uncertainty and court error 59
2.4.3.2 Stochastic due care and the losses of injurers and victims 66
2.4.3.3 Heterogeneous agents 67
2.4.3.4 Asymmetric information and liability rules as mechanisms to reveal information 70
2.4.3.5 Convergence to equilibrium 72
2.5 Other grounds for criticism of comparative negligence 73
Ability to apportion negligence 73
Risk coverage 73
The role of jurors 74
The costly mechanism of adjusting the defendant's liability share both with respect to the plaintiff and with respect to the other defendants 74
2.6 Empirical studies on the performance of contributory and comparative negligence rules, and on pure comparative versus modified comparative negligence 74
2.7 Conclusions 77
Bibliography 77
PART Ⅱ CAUSATION AND MULTIPLE TORTFEASORS 83
3 Causation and foreseeability&Omri Ben-Shahar 83
3.1 Introduction 83
3.2 Causation in early economic analysis of law 84
3.3 Prospective causation 85
3.4 Causation and socially optimal care 86
3.5 Causation under strict liability 87
3.5.1 The effect of the scope of liability on the level of care 87
3.5.2 The effect of the scope of liability on the level of activity 88
3.6 Causation under the negligence rule 89
3.6.1 The determination of the optimal standard of care 89
3.6.2 The effect of the scope of liability on the actual level of care 89
3.6.3 The scope of liability in an imperfectly operating negligence system 89
3.7 Uncertainty over causation 91
3.8 The case for threshold probability rules 92
3.9 The case for the proportional liability rule 93
3.10 Risk-based liability and safety regulation 96
3.11 Causal apportionment among joint tortfeasors 97
3.12 Foreseeability in tort law 100
3.13 Foreseeability in contract law 102
3.14 Causation and litigation costs 104
Bibliography 105
4 Joint and several liability&Lewis A. Kornhauser and Richard L. Revesz 109
4.1 Introduction 109
4.2 Legal regimes 109
4.3 Settlements 110
4.3.1 Several only liability 112
4.3.2 Joint and several liability with two defendants 113
4.3.2.1 Independent probabilities 113
4.3.2.2 Perfectly correlated probabilities 115
4.3.2.3 The effects of limited solvency 115
4.3.3 Joint and several liability with n ＞ 2 defendants 117
4.4 Deterrence: opening remarks 119
4.4.1 Full solvency 120
4.4.1.1 Negligence 120
4.4.1.2 Strict liability 122
4.4.2 Limited, exogenously determined solvency 122
4.4.3 Endogenous solvency 124
4.5 Fairness: several remarks 125
4.6 Size of the plaintiffs recovery 126
4.7 Division of the plaintiff's recovery 126
4.8 The effects of settlements 127
4.9 Division of the burden of insolvency 128
4.10 Insurance under joint and several liability 129
4.11 Conclusions 130
References 130
5 Vicarious and corporate civil liability&Reinier H. Kraakman 134
5.1 Introduction 134
5.2 The standard case for vicarious liability 135
5.3 Factors militating against strict vicarious liability 137
5.4 The interaction between principal and agent liability 140
5.5 Negligence and composite vicarious liability regimes 142
5.6 Reaching beyond the principal: alternative liability targets 144
5.7 Corporate civil liability versus criminal liability 145
Bibliography 147
6 Tort Damages&Louis T. Visscher 153
6.1 Introduction 153
6.2 Full compensation of harm? 156
6.3 Pecuniary and nonpecuniary losses 158
6.4 Assessment of losses 159
6.5 Damages for fatal accidents 160
6.5.1 Introduction 160
6.5.2 Optimal amount that injurers should pay 160
6.5.3 Optimal amount that the surviving relatives should receive 162
6.6 Compensation for nonpecuniary losses? 163
6.7 Uncompensated losses 165
6.8 Punitive damages 166
6.9 Pure economic loss 168
6.10 Harm to the victim or gain to the injurer? 170
6.11 Future losses 171
6.12 Role of defendants' wealth 172
6.13 Mitigation of losses 173
6.14 Judicial moderation, limitation of damages and insolvency 174
6.15 Loss ofachance 176
6.16 Multiple tortfeasors 178
6.17 Secondary accident cost reduction 180
6.18 Empirical research 181
6.19 Conclusion 182
Bibliography 184
7 Pure economic loss&Jef De Mot 201
7.1 Introduction 201
7.2 A taxonomy of pure economic loss cases 202
7.3 The insufficiency of explanations not based on efficiency 203
7.4 Private versus social loss 204
7.5 Private loss, social loss and market structure 206
7.6 Strict liability versus negligence 207
7.6.1 Unilateral precaution accidents 207
7.6.2 Bilateral and trilateral precaution accidents 208
7.7 Intentional versus negligent torts 209
7.8 Economic analysis of the various types of cases 209
7.8.1 Ricochet loss cases 209
7.8.2 Transferred loss cases 209
7.8.3 Closure of public service and infrastructures cases 210
7.8.4 Flawed professional advice cases 210
7.9 Conclusion 211
Bibliography 211
8 Non pecuniary losses&Siewert D. Lindenbergh and Peter P.M. van Kippersluis 215
8.1 Introduction 215
8.2 Tort law and economics 216
8.3 Why should non pecuniary losses be compensated? 217
8.3.1 Why compensation? 217
8.3.2 Prevention 218
8.3.3 Efficient distribution and insurance 220
8.4 Valuation of non pecuniary loss 223
8.5 Risks of high awards 224
8.6 Conclusions 225
Bibliography 226
9 Punitive damages&A. Mitchell Polinsky and Steven Shavell 228
9.1 Introduction 228
9.2 Optimal damages when injurers are found liable for sure: the basic theory of deterrence 229
9.3 Optimal damages when injurers might escape liability 231
9.4 Optimal damages when harm is underestimated 232
9.5 Optimal damages when injurers' gains are socially illicit 233
9.6 Optimal damages when parties can bargain and transact in the marketplace 234
9.7 Optimal damages and punishment 235
9.8 Optimal damages in the light of both objectives 237
9.9 Extensions of the analysis 238
Bibliography 242
PART Ⅳ SPECIFIC CASES 247
10 Environmental liability&Michael Faure 247
10.1 Introduction 247
10.2 Goals of environmental liability 249
10.3 Coase 249
10.4 Negligence versus strict liability 252
10.5 The influence of regulation on liability 253
10.5.1 Criteria for regulation 253
10.5.2 Necessity of the combination 253
10.5.3 Violation of regulation and liability 254
10.5.4 Compliance with regulation and liability 254
10.5.5 Liability and incentive-based instruments 255
10.6 Damage and damages 255
10.7 Moving beyond the original polluter 257
10.7.1 Causal uncertainty 257
10.7.2 Joint and several liability 258
10.7.3 Channelling of liability 260
10.7.4 Liability of lenders and producers 260
10.8 Latency and retroactive liability 261
10.8.1 Retroactive liability? 261
10.8.2 Changes in the level of care 262
10.9 Insurance of environmental liability 263
10.9.1 Moral hazard 264
10.9.2 Adverse selection 265
10.9.3 Latency and retroactive liability 265
10.9.4 Causal uncertainty 266
10.9.5 Compulsory insurance 266
10.9.6 Disaster insurance 267
10.10 Other compensation mechanisms 267
10.11 Environmental federalism and environmental liability 269
10.12 The nuclear risk 270
10.13 Marine oil pollution 272
10.14 Concluding remarks 274
Bibliography 277
11 Products liability&Mark A. Geistfeld 287
11.1 Introduction 287
11.2 The basic model for analyzing the efficiency properties of contracting and tort liability 289
11.3 The significance of imperfectly competitive markets 290
11.4 The role of consumer information about product risk 291
11.5 Do consumers undervalue product safety? 292
11.6 Informational mechanisms in product markets 293
11.7 Product warranties 295
11.8 Insurance costs and warranty liability 297
11.9 The regulatory problem 298
11.10 The choice between negligence and strict liability 300
11.11 Empirical studies of the effect of seller liability on product safety 301
11.12 The impact of tort liability on innovation and productivity 304
11.13 Products liability and the market for liability insurance 306
11.14 Introduction to the main doctrines of products liability 308
11.15 The requirement of defect 309
11.16 Construction or manufacturing defects 310
11.17 Design defects 311
11.18 Warning defects 313
11.19 Extended seller liability 315
11.20 Defenses based on consumer conduct 316
11.21 The enforceability of contractual waivers of seller liability 316
11.22 Bystander injuries 317
11.23 Compensatory damages 318
11.24 Punitive damages 319
11.25 The evolution of products liability, and the evolution of economics 320
Bibliography 321
12 Medical malpractice&Steve Boccara 341
12.1 Introduction 341
12.2 The development of medical malpractice liability 342
12.3 The economic analysis of medical malpractice liability 343
12.3.1 The nature of the doctor-patient relationship 343
12.3.2 Incentive and compensation 344
12.3.3 Medical malpractice and the law and economics approach 346
12.3.4 Tort law, regulation and insurance 347
12.4 The main topics of medical malpractice 349
12.4.1 Negligence versus strict liability 349
12.4.2 Standard of care 351
12.4.3 Is the tort system relevant? 351
12.4.4 Defensive medicine 354
12.5 The medical malpractice crisis 356
12.5.1 The context 356
12.5.2 Malpractice insurance and the underwriting cycle 359
12.6 Some proposals to end the medical malpractice crisis 360
12.6.1 Tort reforms 360
12.6.2 Shifting toward a no-fault system 362
12.7 Conclusions 364
Bibliography 365
PART Ⅴ ALTERNATIVE COMPENSATION SYSTEMS 377
13 Tort law and liability insurance&Gerhard Wagner 377
13.1 Introduction 377
13.2 The economic rationale of insurance 377
13.2.1 The demand for insurance 377
13.2.1.1 Risk aversion 377
13.2.1.2 Consequences for the deterrence function of tort law 379
13.2.1.3 Insuring liability for fault 380
13.2.1.4 Non-pecuniary losses 381
13.2.2 The supply of insurance 382
13.2.2.1 Pooling: the law of large numbers 382
13.2.2.2 Subdivision of risk 383
13.3 Compensation of victims as a purpose of liability insurance? 384
13.4 Economic problems of liability insurance 386
13.4.1 Asymmetric information and imperfect insurance 386
13.4.2 Adverse selection 388
13.4.3 Moral hazard 389
13.4.3.1 Effect: destruction of incentives generated by tort law 389
13.4.3.2 Source: informational asymmetry 390
13.4.3.3 Remedy: partial insurance 391
13.4.3.4 Activity levels 392
13.5 Economic virtues of liability insurance 393
13.5.1 Unlimited liability on paper, limited liability in reality 393
13.5.2 The pervasiveness of limited liability 394
13.5.3 Limited liability and the incentive to take care 394
13.5.4 Limited liability and the incentive to insure 395
13.5.5 Limited liability and activity levels 397
13.5.6 Compulsory insurance 397
13.5.7 Alternative means 398
13.6 The limits of insurance: insurability 399
13.6.1 Uninsurability as an argument in political discourse 399
13.6.2 Elements of insurability 399
13.6.3 Insurability as a flexible concept 400
13.7 The impact of liability insurance on tort law 401
Bibliography 402
14 No-fault compensation systems&Karine Fiore 406
14.1 Introduction 406
14.2 No-fault systems: the priority given to the protection of victims 407
14.2.1 Definition of no-fault systems 407
14.2.2 The theoretical rationale of no-fault systems 409
14.2.2.1 Higher compensation 409
14.2.2.2 Lower transaction costs 409
14.2.2.3 Lower insurance premiums 410
14.2.3 Disadvantages of no-fault systems 411
14.2.4 Examples and empirical evaluations 412
14.2.4.1 Automobile insurance 412
14.2.4.2 A universal no-fault system: the case of New Zealand 413
14.3 No-fault versus strict liability systems 416
14.3.1 Definition of the strict liability system 416
14.3.2 The advantages of strict liability 416
14.4 The efficiency of compensation systems: the necessary conditions 418
14.4.1 Unlimited liability/compensation amounts 418
14.4.2 Safety regulation 420
14.4.3 Compulsory insurance 421
14.5 Examples of compensation systems (based on strict liability) for catastrophic risks 422
14.5.1 Compensation for nuclear accidents 423
14.5.2 Compensation for marine oil pollution accidents 425
14.6 Conclusions 427
Bibliography 427
PART Ⅵ OTHER PERSPECTIVES ON TORT LAW 435
15 Harmonizing tort law: a comparative tort law and economics analysis&Willem H. van Boom 435
15.1 Introduction 435
15.2 Tort law as domestic preference 436
15.3 Domestic preferences and the market for tort law systems 438
15.4 Differences in European tort law systems and the harmonization of tort law 439
15.4.1 General 439
15.4.2 Economic analysis in the harmonization debate 440
15.4.3 Tort law an obstacle for the mobility of persons and goods? 442
15.4.4 Regulatory competition versus culture 443
15.4.5 Cross-border externalities argument 444
15.4.6 Race to the bottom argument 445
15.4.7 Reduction of(transaction) cost 446
Bibliography 447
PART Ⅶ EMPIRICS 453
16 Empirics of tort&Ben C.J. van Velthoven 453
16.1 Introduction 453
16.2 Prerequisites for empirical analysis 456
16.2.1 Variation 456
16.2.2 Data 458
16.2.3 Methods 459
16.3 The tort litigation system 461
16.3.1 Base rate 462
16.3.2 Claiming rate 463
16.3.3 Disposition of claims 465
16.3.4 Punitive damages 468
16.3.5 Administrative costs 470
16.4 Effects of tort reform on litigation and insurance 471
16.5 Safety effects 473
16.5.1 Automobile accidents 474
No-fault 474
Other changes in liability rules 477
Other safety measures 477
16.5.2 Industrial accidents 479
From negligence to workers' compensation 480
Trends in workers' compensation 480
16.5.3 Product liability 482
Empirical findings 483
Asbestos 484
16.5.4 Medical malpractice 485
Defensive medicine 486
16.6 Cost-benefit analysis 488
Bibliography 490
Index 499