Abstract
The previous literature has shown that if the agent has limited assets, the vicarious liability law under a strict liability rule can effectively make the principal monitor her agent, and induce the agent to take more care, which thereby reduces the social cost. In practive the negligence rule still applies to many tort cases, and the principal's monitoring evidence is often needed to prove the agent's negligence. It is possible that the principal will conceal the monitoring evidence from the court in order to avoid the vicarious liability. In such a case the society has to occur higher investigation cost than otherwise. To save the investigation cost, the court may want to provide incentives to induce honest reports either by lowering the due care level, or by lowering the level of vicarious liability.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
