Abstract

Traditional tort models analyze the role of liability rules to induce optimal levels of activity and of care, focusing on the law’s ability to deter accidents by imposing a cost on tortfeasors. Legal liability, however, further provides compensation for victims, and is apt to reduce victims’ aggrievement and thereby crowd out socially costly forms of private redress. This article presents a model of accidents and liability that endogenizes victims’ aggrievement and its behavioral consequence in form of retaliation. It reveals how strict liability performs better than negligence to minimize retaliation and to avoid overinvestment in care that is predicted under negligence. The predictions are tested in a laboratory experiment that provides evidence for these effects and for the assumption that experienced harm leads to retaliation. Compensation is justified not only because of its effects on potential tortfeasors, but also because of its effects on victims’ behavior, and thereby on social welfare.

Paper

The paper is shared via mail with ACLE Research Members, Associates and registered seminar participants only.

About the Speaker

Professor of Law at FGV Direito SP since 2019 and senior researcher at the Max Planck Institute for Social Law and Social Policy in Munich since 2016, Sergio Mittlaender holds a Ph.D. in Law and Economics (EDLE). His research focus on private law, especially in contracts and torts, social law and public policies against corruption and discrimination. The approach is empirical, adopting methods such as field and laboratory experiments, as well as theoretical, focusing on the economic analysis of law, behavioral economics and game theory.

About the ACLE

The Amsterdam Center for Law and Economics (ACLE) is a joint initiative of the Faculty of Economics and Business and the Faculty of Law at the University of Amsterdam. The objective of the ACLE is to promote high-quality interdisciplinary research at the intersection between law and economics.

Practicalities

This event will be a hybrid event. (Note: Subject to change due to Covid-19 government or UvA measures). The zoom link will be specified in the registration confirmation email upon registration for the event. If you would like to attend the seminar in person on Roeterseiland campus, please register here. Room information will be indicated by email upon registration. In-person places will be limited, cannot be guaranteed and will be allocated on a first-come-first-served basis.