Victim Interdependence in the Accident Setting

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German Working Papers in Law and Economics

AUTHOR:
Tim Friehe

TITLE:
Victim Interdependence in the Accident Setting

SUGGESTED CITATION:
Tim Friehe (2008) "Victim Interdependence in the Accident Setting", German Working Papers in Law and Economics: Vol. 2008: Article 2.
http://www.bepress.com/gwp/default/vol2008/iss1/art2

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ABSTRACT:
This paper considers the case that potential victims affect each other by taking care. Analyzing standard liability rules, we show that strict liability with a defense of contributory negligence is in the best position to induce the efficient outcome, i.e., this liability rule ensures efficiency if victims affect each other negatively - care by one victim increases the accident exposure of other victims - and makes the attainment likely if victims affect each other positively - if care by one victim decreases the accident exposure of other victims. In contrast, the other standard liability rules fail to induce first-best care.