Imperfect Observability , Tort Liability Rules , and Incentive for Care ∗
نویسنده
چکیده
This paper studies an economic model of tort liability rules and considers litigation between a firm and a consumer, under the assumption that the consumer may not perfectly observe the firm’s action. We compare two alternative tort liability rules: the Negligence rule and strict liability with contributory negligence. We consider the noiseless case as a benchmark, and show that under those two cases, the desirable tort liability rule is different. This result implies that even if the noise is sufficiently small, the situation can not be approximated by the noiseless model.
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