ECON2120 Lecture Notes - Lecture 4: Res Ipsa Loquitur, Comparative Negligence, Risk Aversion
Law and Economics (ECON 2120, 2139, 4447 & 8047) 2017
Lecture outline and reading list
Topic 4 Torts Weeks 7-9
Accidents between strangers
Role of tort law
Unilateral care model
Strict liability
Negligence
Bilateral care model
Contributory and comparative negligence
The activity level issue
Errors in adjudication
The judgment proof problem
Least cost avoider in accidents: Res ipsa loquitur
*Polinsky ch.6
Miceli, T. 2009, The Economic Approach to Law 1st edition, ‘An Economic Model of Accidents: The
Model of Precaution’ pp.42-59, ‘Activity levels’ pp.66-68
Friedman, D. Law’s Order pp.197-205
Firms as injurers of strangers: Pollution control
Firms as injurers: output as activity
Pollution by firms
Only polluters determine harm
Negligence v Strict liability
Victims also affect harm
*Polinsky ch.13
Risk and insurance
Risk bearing and insurance
Risk aversion
The role of insurance
Moral hazard
Ideal insurance
Imperfect insurance
Liability rules with insurance: incentives and risk bearing
Private insurance not available
Ideal insurance available
Imperfect insurance available
*Polinsky chs. 7, 9
Shavell, S. 2004, Foundations of Economic Analysis of the Law pp.257-69
Starred readings are mandatory, the others are supplemental.
