Abstract
In this article, private enforcement under negligence when there is legal error and litigation is costly is examined. Ordover (1978) demonstrated that in a negligence regime in which there is no legal error and litigation is costly, equilibrium requires the presence of actors who refuse to obey the due-care standard. Accordingly, in such a negligence regime, an undercompliance equilibrium must result. Since the existence of litigation costs implies that the socially optimal level of care is greater than that required by the traditional Hand formula, which defines negligence as a failure to take care where the cost of taking care is less than the expected loss if the accident occurs, 1 it is a short step from Ordover's undercompliance result to the conclusion that injurers,2 under negligence, exercise less than the socially optimal level of precaution (see Hylton). It is demonstrated that, because of legal error, an undercompliance equilibrium need not result under negligence. In a negligence regime in which courts err and litigation is costly, perfect and overcompliance equilibria are
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