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Art
AUTHOR:
Tim Friehe
TITLE:
Interdependent Costs of Precaution
SUGGESTED CITATION:
Tim Friehe
(2006)
"Interdependent Costs of Precaution",
German Working Papers in Law and Economics:
Vol. 2006:
Article 22.
http://www.bepress.com/gwp/default/vol2006/iss1/art22
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ABSTRACT:
Standard liability rules do not lead to efficient care choices by injurer and victim if precaution costs are interdependent. This result of Dharmapala and Hoffmann (2005) is shown to depend on role-type certainty. We allow for role-type uncertainty and demonstrate that standard liability rules can handle the complication of interdependent costs of care. Thereby, a context is identified in which uncertainty can further efficiency.