Correlated accidents

Franzoni, Luigi Alberto (2016) Correlated accidents. Bologna: Dipartimento di Scienze economiche DSE, p. 28. DOI 10.6092/unibo/amsacta/5406. In: Quaderni - Working Paper DSE (1074). ISSN 2282-6483.
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Abstract

This paper investigates cases in which harms are statistically correlated. When parties are risk averse, correlation plays an important role in the choice between liability rules. Specifically, positively correlated harms favor a liability rule that spreads the risk over a multitude of parties, as in the negligence rule. Negatively correlated harms favor a liability rule that pools risks together, as in strict liability. The same applies when parties can purchase costly insurance (first party or third party). This policy recommendation is in line with current products liability law, which places design defects and warning failures under a de facto negligence regime.

Abstract
Document type
Monograph (Working Paper)
Creators
CreatorsAffiliationORCID
Franzoni, Luigi AlbertoUniversità di Bologna0000-0002-6116-5373
Keywords
negligence vs. strict liability, correlation, products liability
Subjects
ISSN
2282-6483
DOI
Deposit date
02 Sep 2016 07:51
Last modified
07 Jun 2017 09:06
URI

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