Negligence Rule Research Articles

On the Invariance Result of Liability Rules in Oligopoly

Abstract In this paper, we revisit the invariance result of liability rules established by Polinsky (1980. “Strict Liability vs. Negligence in a Market Setting.” The American Economic Review 70: 363–7) and Shavell (1980. “Strict Liability Versus Negligence.” Journal of Legal Studies 9: 1–25) in oligopoly. We show that in the case of linear demand functions, symmetric duopoly firms produce less than the efficient quantity levels under all of the no liability rule, the strict liability rule and the negligence rule but they take the efficient level of care under the strict liability rule and the negligence rule whereas they take no care under no liability rule. Thus, the invariance result does not hold in the case of duopoly. So, contrary to the invariance result, our result has an important implication that the liability rule in addition to the price plays a crucial role in providing a proper incentive to duopoly firms. Instead, we establish a weaker version of invariance result between the strict liability rule and the negligence rule in oligopoly with general demand functions.

Strict liability versus negligence in the case of data breach

This study compares the efficiency of the strict liability and negligence rules in the case of a data breach. Contrary to standard results, we demonstrate that the strict liability rule cannot induce the efficient activity and care levels of a data controller. This is mainly due to possible positive externalities from data breaches, unlike in usual tort cases. We show that the negligence rule is more efficient than the strict liability rule if the positive externality is sufficiently large. The main insight is carried over to the case where a data controller uses a data processor to process personal information before selling it in the market. If hackers are explicitly introduced into the model, the care level of the data controller increases with the hacking activity, whereas the latter level decreases with the former. In this model, if the hacker’s gain is sufficiently small, the negligence rule can be made more efficient by adjusting due care to a harsher level than the equilibrium care level under strict liability to reduce hacking activity, although a pure strategy equilibrium may not exist for some due care levels.

An Alternative to the Basic Causal Requirement for Liability Under the Negligence Rule

Abstract The primary causal requirement that must be met for a negligent party to be held liable for a harm is a demonstration that the harm would not have occurred if the party had not been negligent. Thus, for a speeding driver to bear liability for harm done in a car accident, it must be shown that the accident would not have happened if the driver had driven at a reasonable speed. The main point made here is that this basic causal requirement may be difficult or impossible to satisfy and hence may interfere with the discouragement of negligence. Therefore, an alternative and usually easier-to-meet causal requirement is proposed – that the harm would not have occurred if the negligent party had not been engaged in his activity (if the driver had not been engaged in driving).

Conducting a Comparative Analysis of Medical Negligence Laws in Ghana's Courts Act 1993 (Act 459) and Other African Common Law Countries Concerning Artificial Intelligence Systems

This comparative legal analysis examines gaps in medical negligence liability principles and healthcare AI governance policies across Ghana, Nigeria and South Africa. Applying structured analytical frameworks, it maps longstanding laws focused on human provider standards of care against modern contexts of rising algorithmic and robotic assistance needing tailored accountability. By identifying jurisdictional deficiencies in adapting existing negligence rules to emerging technologies, targeted recommendations to update century-old statutes through enumerated amendments are proposed for aligning law with clinical disruption. This forward-looking modernization of reasonableness constructs and negligence duties represents an original jurisprudential contribution strengthening accountability in AI integration protecting patient welfare. Significance emerges for developers, policymakers and adopters in forming clear guidelines and statutory updates essential for responsible health AI innovation as Africa undergoes profound practice transformation. In conclusion, deliberate legal reforms affirm enduring human dignity commitments amidst technological upheaval through precision scaffolding, catalyzing ethical adoption rooted in regional values.

Objektív felelősség és kiszámíthatóság

This article provides a critical analysis of the main claims of the Austrian school of law and economics on tort liability. It reviews the normative claims of the Austrian school. It identifies the requirements the Austrian achool articultes towards law and which can be described in five points. According to them positive law should be (i) abstract, (ii) simple, (iii) predictable, (iv) should change incrementally, and (v) should reflect the basic informal rules, social expectations. They maintain that in the case of tort liability, a prima facie strict liability would meet these requiremes much better than the negligence rule. The article contests this claim and argues that it is not clear that the strict liability would be more predictable or better suited to informal social rules.

Liability and the incentive to improve information about risk when injurers may be judgment-proof

We analyze an injurer’s incentives to improve her information about accident risk. In contrast to the preceding literature, injurers can continuously improve their understanding of the expected harm their activity will impose on others. Regarding social incentives, the marginal benefit from improved risk information is increasing, possibly making either no or a perfect understanding of risk socially optimal. Turning to private incentives when the injurer’s asset constraint is non-binding, strict liability induces the first-best outcome, whereas the negligence rule induces excessive information acquisition. By contrast, when the injurer’s asset constraint is binding, under both liability rules, the injurer’s incentives to acquire information about risk is too small in many circumstances but can also be excessive in other circumstances.

Decomposition of accident loss and decoupled liability assignment: A class of negligence rules

Decomposition of accident loss and decoupled liability assignment: A class of negligence rules

Understanding Medical Malpractice Lawsuits.

Understanding Medical Malpractice Lawsuits.

An Alternative to the Basic Causal Requirement for Liability Under the Negligence Rule

An Alternative to the Basic Causal Requirement for Liability Under the Negligence Rule

An Alternative to the Basic Causal Requirement for Liability Under the Negligence Rule

An Alternative to the Basic Causal Requirement for Liability Under the Negligence Rule

Allocating Liability among Several Physicians: A Theoretical Model

Abstract Healthcare treatment can be considered a credence good; that is, the patient may not always be able to infer quality ex ante nor observe it ex post. In this article, we study the allocation of liability among two physicians for joint damage under two liability regimes: strict liability and the negligence rule. The credence characteristic implies that the patient imperfectly detects treatment error. We find that the negligence rule is more deterrent than strict liability if the probability of detection of treatment error by the patient is high. If the probability of detection is low, both liability regimes are equivalent. An efficient allocation rule should be based on the degree of substitutability between the precaution levels of the physicians and the probability that the patient detects treatment error.

Reputation and liability in experience goods markets with imperfect monitoring

This paper investigates the interaction of reputation and product liabilities from a new perspective. We introduce a reputation model in an experience good market with imperfect monitoring, in which reputation incentives without product liability are not sufficient for inducing a desired outcome. Even a firm with high market reputation will cheat consumers, and the reputation will eventually collapse. We then introduce two product liabilities into the reputation model: strict liability and negligence rule . It is shown that under certain conditions, these two liabilities can both improve firms’ incentives and final outcomes. What is the best product liability depends on the costs of firms and courts as well as courts’ professional level. The paper also sheds light on which liability regime is optimal in this reputational setting. • We investigate the interaction of reputation and product liabilities from a new perspective. • We introduce a reputation model in an experience good market with imperfect monitoring, in which reputation incentives without product liability are not sufficient for inducing a desired outcome. • Under certain conditions, strict liability and negligence rule can both improve firms’ incentives and final outcomes. • What is the best product liability depends on the costs of firms and courts as well as courts’ professional level.

Negligence rules coping with hidden precaution

This paper investigates the implementation of negligence rules when the negligent act constitutes a hidden action in the sense of principal–agent theory and where the available evidence is generated by a signal. Any liability rule exclusively based on the available evidence comes with an incentive threshold. Agents with cost savings from the negligent act above this threshold commit the negligent act whereas the others do not. In a first step, liability rules are examined that implement a given incentive threshold at minimum error costs. As this is a linear programming problem, the present paper makes heavy use of duality theory. The multiplier of the incentive constraint if understood as shadow price allows for an intuitive explanation of the results. As a second step, a comparative statics analysis with respect to the incentive threshold is provided. Surprisingly enough, the relation between the threshold and minimum error costs need not be monotonic.

Lei Geral de Proteção de Dados Pessoais: uma análise econômica sobre o seu regime de responsabilidade

Considering the controversies related to the Brazilian General Data Protection Law (LGPD) liability regime, this paper aims to examine the kind of liability which would be more efficient as the one capable to maximize social welfare, pursuant to Law and Economics Theory. After a brief study over the liability regimes, a doctrinal discussion concerning this paper theme is presented followed by its economic analysis. We conclude that LGPD authorizes the construction of two distinct regimes: strict, to consumer relations and negligence rule with the defense of contributory negligence, to other cases. We verify that more precaution is not always socially desirable and that the outcome shall be efficient provided that the potential offender assumes the burden of evidence costs. Thereby, the liability regime may be the strict one or the negligence rule with the defense of contributory negligence. Specifically, in consumer relations the strict liability seems to be more efficient.

Lenders' liability and ultra-hazardous activities

The amendments made to the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) in 1996 reinforced the exemption of lenders that finance ultra-hazardous activities. Then, they become involved in liability only if they manage or own polluting activities. The paper compares strict liability and negligence rule in an agency model of vicarious liability type, and proposes to restore lenders as principal by applying negligence rules to them while operators would resort to a strict liability rule. This scheme leads the lender to propose to the borrower the most favourable loan level that induces the latter to provide the socially optimal security level.

Liability from the use of medical artificial intelligence: a comparative study of English and Taiwanese tort laws

Background: Modern artificial intelligence applications are appearing in healthcare and medical practices. Artificial intelligence is used both in medical research and on patients via medical devices. The aim of this paper is to examine and compare English and Taiwanese tort laws in relation to medical artificial intelligence. Methods: The methodologies employed are legal doctrinal analysis and comparative law analysis. Results: The investigation finds that English tort law treats wrong diagnostic or wrong advice as negligent misstatement, and mishaps due to devices as a physical tort under the negligence rule. Negligent misstatement may occur in diagnosis or advisory systems, while a negligent act may occur in products used in the treatment of the patient. Product liability under English common law applies the same rule as negligence. In Taiwan, the general principles of tort law in Taiwan’s Civil Code for misstatement and negligent action apply, whereas the Consumer Protection Act provides for additional rules on product liability of traders. Conclusions: Safety regulations may be a suitable alternative to tort liability as a means to ensure the safety of medical artificial intelligence systems.

Car accidents in the age of robots

In this paper, we compare liability rules in a world where human-driven and fully-autonomous cars coexist. We develop a model where a manufacturer can invest to improve the safety of autonomous cars. Human drivers may decide to purchase a fully-autonomous car to save precaution costs to avoid road accidents and shift liability to the car manufacturer. As compared to the negligence rule, a strict liability regime on both human drivers and car manufacturers is proved to be a superior policy. In particular, strict liability leads to more efficient R&D investments to enhance the benefits of the technology and favors the adoption of fully-autonomous cars. We also recommend that users of fully-autonomous cars make a technology-dependent payment to a third-party if there is an accident to discipline their activity levels.

Liability rules can rationalize greater victim vulnerability

ABSTRACT This paper shows that an imperfect strict liability rule can induce victims to increase the losses they incur in the event of an accident, and that similar incentives exist under the negligence rule. Using a simple model in which victims can influence their harm distribution, we identify two potential reasons why victims may benefit from greater ‘vulnerability’, namely strategic effects on own future and others’ behaviour.

Precision and Manipulation of Non‐financial Information: The Curious Case of Environmental Liability

This paper develops a model showing how the environmental liability regime and the precision of the disclosed environmental performance indicator affect managers’ incentives (1) to reduce actual pollution and (2) to manipulate the reported pollution. I assume a company with a separation of ownership and control which can be held liable for environmental damages and distinguish between a negligence regime and strict liability. The results suggest that if there is no manipulation but only a lack of precision of the disclosed environmental performance indicator, a negligence rule induces lower actual pollution levels than strict liability even though a negligence rule is considered to be more lenient. If managers are able to manipulate the disclosed environmental performance indicator, they will do so and actual pollution levels will generally increase. While manipulation makes it easier for shareholders to escape liability under a negligence regime, shareholders suffer from manipulation under strict liability due to higher actual pollution and higher expected damage compensation payments. Therefore, the manipulation level is higher under a negligence regime. My analysis contributes to the environmental performance and disclosure literature by showing that the liability regime is an important determinant affecting environmental reporting and actual pollution decisions.

Economic Analysis of Accident Law: A New Liability Rule that Induces Socially Optimal Behaviour in Case of Limited Information

Abstract In accident law, we seek a liability rule that will induce both the parties to adopt socially optimal levels of precaution. Economic analysis, however, shows that none of the commonly used liability rules induce both parties to adopt optimal levels, if courts have access only to ‘Limited Information’ on. In such a case, it has also been established (K. (2006). Efficiency of liability rules: a reconsideration. J. Int. Trade Econ. Dev. 15: 359–373) that no liability rule based on cost justified untaken precaution as a standard of care can be efficient. In this paper, we describe a two-step liability rule: the rule of negligence with the defence of relative negligence. We prove that this rule has a unique Nash equilibrium at socially optimal levels of care for the non-cooperative game, and therefore induces both parties to adopt socially optimal behaviour even in case of limited information.