The care and activity level effects of various rules are summarized on the following table:
|
Is There An |
No Liability |
Strict Liability |
Negligence |
Strict Liability |
| Care by Truck Driver? |
. |
|
|
|
|
Truck Activity? |
. |
|
. |
|
|
Care by Car Driver? |
|
. |
|
. |
|
Car Activity? |
|
. |
|
. |
The general lesson is that whether a negligence standard or a strict-liability standard would be better depends on:
(a) the relative risk aversion of the parties and
(b) who is most likely to be the best activity-level modulator.
If defendants can best adjust the level of their activities, we might wish to use a strict liability rule.
If plaintiffs are the best activity-level modulators, we would tend to prefer a negligence rule.
For further discussion of the effects of legal rules on care and activity levels in unilateral and bilateral accidents, see Steven Shavall’s Strict Liability versus Negligence 9 J. Legal Stud. 1, 2-3 (1980).
Utopia, you are standing in it! 
Nov 10, 2014 @ 13:13:34
What is referred to here as “activity level” really represents any precaution which the court either cannot observe (how much attention was I paying to my driving) or cannot judge the optimal level of. In either case, the court cannot tell if the defendant was negligent. Activity level, whether I chose to take that particular trip, is just a convenient example of such a precaution, since although the court knows I took the trip it cannot tell whether doing so was worth the cost in additional risk that my taking it created, hence whether taking it was or was not negligence.
For a more detailed discussion of these questions see:
http://www.daviddfriedman.com/Laws_Order_draft/laws_order_ch_14.htm
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Nov 10, 2014 @ 13:24:29
Thanks David, when I had dealings with safety regulators, I have a lot of trouble selling the notion that the risky behaviour of ordinary people and, in particular, employees is changed by incentives.
I even tried the example of asking one of them if their driving habits would change if they weren’t allowed to wear seat belts. Wearing seat belts is compulsory in New Zealand.
He said no.
My interpretation of this is that any discussion of how ordinary people and in particular employees contribute to accidents is somehow to blame them and reduces the liability and blame on their employer.
My impression is a graduate economist in Canberra in the Department of Finance carries with me today: the quality of public policy analysis would double if people remembered the first six weeks of microeconomics 101.
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Nov 13, 2014 @ 01:11:16
The table looks wrong to me. Doesn’t contributory negligence give the incentive for the victim to take optimal care (assuming the courts set the standard correctly).
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Nov 13, 2014 @ 09:57:06
Mark, good point on the car driver. For a presentational viewpoint, I think ticking that box might have made the table a little bit hard to understand.
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