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Law & Economics: Inducing Negligence

Ariel Porat, Tel Aviv University Buchmann Faculty of Law & University of Chicago Law School

Abstract:

Would a potential victim prefer to be treated negligently? We show that even with less than full compensation the answer might be yes. The reason for this is that under tort law victims are often compensated by negligent injurers for the materialization of risks not created by their negligence. Thus, by being exposed to even slight negligence, they gain free insurance for those risks. More interestingly, we also show that under certain circumstances some injurers would prefer to behave negligently toward their victims, even if they expect to compensate them for risks not created by their negligence. As a result, victims might select them as their potential injurers, or in our terms, “induce negligence.” Although behaving negligently given the selection of the injurer by the victim can be efficient, inducing negligence is not the first best. In order to achieve the first best, courts should avoid attributing liability for harms materialized from risks not created by negligence (or resort to contributory negligence). We explain how they should do so.

co-authored with Alon Cohen & Avraham Tabbach
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When and Where

Map South Hall - 1020

October 2018

4:30pm - 6:30pm

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