Optimal standards of negligence when one party is uninformed of the standards

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Optimal standards of negligence when one party is uninformed of the standards

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dc.contributor.author Lando, Henrik en_US
dc.date.accessioned 2009-02-04T10:26:28Z
dc.date.available 2009-02-04T10:26:28Z
dc.date.issued 2008-11-13T00:00:00Z en_US
dc.identifier.uri http://hdl.handle.net/10398/7221
dc.description.abstract When a court sets standards of due care in a tort or contract case with a view to how the standards will affect future behavior of parties similar to the litigants, it should sometimes realize that only one of the two future parties is likely to become informed of the standards. The standards can then only have a direct effect on the behavior of the informed party, and it may be thought that the court should hold the informed party strictly liable, which maximizes this effect. However, this ignores that the informed party may, although strictly liable, lower her level of care in order to induce the uninformed party to take greater care. In this situation, the negligence rule may do better than strict liability, since the discontinuity of the negligence rule can prevent the informed party from strategically lowering her level of care. Under the negligence rule, optimal standards are sensitive to whether the informed party acts first and to whether she is the injurer or the victim. For both the informed and the uninformed, there are circumstances in which the standard should be higher than first best and other circumstances where it should be lower. en_US
dc.format.extent 27 s. en_US
dc.language eng en_US
dc.relation.ispartofseries Working paper;2008-01 en_US
dc.title Optimal standards of negligence when one party is uninformed of the standards en_US
dc.type wp en_US
dc.accessionstatus modt08nov13 nijemo en_US
dc.contributor.corporation Copenhagen Business School. CBS en_US
dc.contributor.department Institut for Industriøkonomi og Virksomhedsstrategi en_US
dc.contributor.departmentshort IVS en_US
dc.contributor.departmentuk Department of Industrial Economics & Strategy en_US
dc.contributor.departmentukshort IES en_US
dc.idnumber x656557175 en_US
dc.publisher.city København en_US
dc.publisher.year 2008 en_US


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