Dari-Mattiacci and Franzoni, ‘Innovative Negligence Rules’

Often, injurers or victims (or both) can adopt a new technology that reduces the social costs of accidents. When adoption costs are not verifiable in court, optimal adoption decisions cannot be induced by means of an appropriate determination of negligence. Hence the parties might either over- or under-adopt. We study how due-care standards should be conditioned on the technology adopted by the parties in order to improve adoption decisions. We demonstrate that standards should be biased upwards or downwards, depending on whether the new technology reduces or increases expected harm.

Giuseppe Dari-Mattiacci and Luigi Alberto Franzoni, Innovative Negligence Rules. American Law and Economics Review (2014), doi: 10.1093/aler/aht021. First published online: January 6, 2014.

First posted 2014-01-07 07:26:47

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