Efficiency of Liability Rules with Role-Type Uncertainty

Abstract

In the law and economics literature the question of efficiency of liability rules has primarily been analyzed in the context of two-party interactions in which identities of the victim and the injurer in case of occurrence of accident, are a priori certain. The main conclusion that has emerged is that while various negligence rules as well as the rule of strict liability with the defense of contributory negligence are efficient, the rules of no liability and strict liability are not. This paper shows that if the identities of the victim and the injurer in case of occurrence of accident are a priori uncertain then efficient apportionment of accident losses can be achieved only under very restrictive assumptions.