Abstract
This paper seeks to give a new interpretation of the rules that provide for compensation or indemnification when a person takes an action in a case of necessity. The person acting out of necessity will also take into account the sum of money that he/she will be required to pay if the necessary action is taken. Moreover, the amount of the compensation will affect the choices made by the victim. More specifically, it will be shown that in certain situations compensation should ideally be equal to the damage actually suffered by the victim, while in others optimal compensation could even be equal to zero, and in any case not sufficient to cover the entire damage suffered by the victim. This incentive-based interpretation suggests that certain compensation rules that so far have been considered efficient by scholars of Law and Economics are indeed inefficient.
Baffi, Enrico, On the Efficiency of Indemnification in Cases of Necessity: Is American Common Law Inefficient? (September 11, 2018).
First posted 2018-10-02 06:20:14
Leave a Reply