Research Handbook on Economic Models of Law

Research Handbook on Economic Models of Law

Research Handbooks in Law and Economics series

Edited by Thomas J. Miceli and Matthew J. Baker

One of the great successes of the law and economics movement has been the use of economic models to explain the structure and function of broad areas of law. The original contributions to this volume epitomize that tradition, offering state-of-the-art research on the many facets of economic modeling in law.

Chapter 7: Tort standards and legal expenditures: a unified model

Jef De Mot and Ben Depoorter

Subjects: economics and finance, history of economic thought, law and economics, methodology of economics, law - academic, law and economics


Law and economics scholars have long debated the efficiency benefits of various liability standards. Specifically, a lively debate exists even to date as to whether a comparative negligence or contributory negligence provides better incentives to adopt efficient care (see, e.g., Artigot i Golobardes and GÛmez Pomar 2009; Bar-Gill and Ben-Shahar 2003). Whereas the early literature concluded that contributory negligence was more efficient (e.g., Brown 1973; Diamond 1974; Posner 1977), scholars subsequently questioned the alleged superiority of comparative negligence on various grounds (Haddock and Curran 1985; Shavell 1987; Cooter and Ulen 1986; Bar-Gill and Ben-Shahar 2003). Whereas the efficiency-promoting aspects of various tort standards remain a contentious matter, there is a widespread consensus that a comparative negligence standard imposes higher administrative costs than a simple negligence standard (Landes and Posner 1987; White 1989) or a simple negligence standard with a defense of contributory negligence (Shavell 1987; Bar-Gill and Ben-Shahar 2001). White (1989), for instance, argues that a comparative negligence standard likely generates higher litigation and administrative costs than contributory negligence because courts must assess the degree of negligence by both parties and not just whether the parties were negligent. De Mot (2013) argues that this wisdom obviously applies to settings involving exogenous litigation costs, but that the literature has not considered whether it holds in a more realistic setting where litigation costs are endogenously determined.

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