Private Law Theory

ABSTRACT
This article analyzes the workings of liability when harm-inflicting consumers are present biased and both product safety and consumer care influence expected harm. We show that present bias introduces a rationale for shifting some losses onto the manufacturer, in stark contrast with the baseline scenario in which strict consumer liability induces socially optimal product safety and precaution levels. In addition, we establish that strict liability with contributory negligence may induce socially optimal product safety and precaution choices.

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Tim Friehe, Christoph Rößler and Xiaoge Dong, Liability for Third-Party Harm When Harm-Inflicting Consumers Are Present Biased, American Law and Economics Review, https://doi.org/10.1093/aler/ahz013. Published: 4 February 2020.

First posted 2020-02-09 10:35:33