Student
Rohan Mathew
20131195
Economic Analysis Of Law : Paper 1
Strict Liability v. Negligence : An Economic Perspective
To try and understand which rule of negligence is most efficient for use in real world environments and to estimate why so, we will take into account a hypothetical situation, erased of all complexities. We assume a case of accident such that there are only two parties and we also assume that probability of an accident occurring is absolute. The driver has three ways to drive : Rapid, Moderate and Slow, his benefits and expected accident costs are given in fig 1 . The first step is to apply the laws of strict liability and that of negligence in the perspective of the driver and to see what is the most economically efficient way for the driver to act . In case of strict liability the driver is liable whatever the scenario might be and in case of negligence the driver is liable only if he fails to keep to the standard of care. The standard of care is determined by looking at what is the most efficient way for the driver to drive and any care taken which is equal to or above that is considered as adhering to the standard of care.
Driving Style Benefit for Driver Expected Accident Cost Efficiency (Benefit - Cost) Strict Liability
(Efficiency) Negligence
(Efficiency)
Rapid 120 100 20 20 20
Moderate 80 40 40 40 80
Slow 50 20 30 30 50
Fig 1 Looking at the figures we can clearly see that the efficiency is maximum in the instance when the driver drives moderately and therefore regardless of which rule is followed the driver will drive moderately. (The standard of care is considered to be moderate by the court in an ideal scenario and therefore the liability is zero at moderate and slow.)
Introducing The Victim’s Behaviour
To assume that in a case of an accident all the fault would be on the driver (defendant) is not fair, there are actions of the pedestrian (the victim) that can influence the accident as much as the driver can. Introducing
20131195
Economic Analysis Of Law : Paper 1
Strict Liability v. Negligence : An Economic Perspective
To try and understand which rule of negligence is most efficient for use in real world environments and to estimate why so, we will take into account a hypothetical situation, erased of all complexities. We assume a case of accident such that there are only two parties and we also assume that probability of an accident occurring is absolute. The driver has three ways to drive : Rapid, Moderate and Slow, his benefits and expected accident costs are given in fig 1 . The first step is to apply the laws of strict liability and that of negligence in the perspective of the driver and to see what is the most economically efficient way for the driver to act . In case of strict liability the driver is liable whatever the scenario might be and in case of negligence the driver is liable only if he fails to keep to the standard of care. The standard of care is determined by looking at what is the most efficient way for the driver to drive and any care taken which is equal to or above that is considered as adhering to the standard of care.
Driving Style Benefit for Driver Expected Accident Cost Efficiency (Benefit - Cost) Strict Liability
(Efficiency) Negligence
(Efficiency)
Rapid 120 100 20 20 20
Moderate 80 40 40 40 80
Slow 50 20 30 30 50
Fig 1 Looking at the figures we can clearly see that the efficiency is maximum in the instance when the driver drives moderately and therefore regardless of which rule is followed the driver will drive moderately. (The standard of care is considered to be moderate by the court in an ideal scenario and therefore the liability is zero at moderate and slow.)
Introducing The Victim’s Behaviour
To assume that in a case of an accident all the fault would be on the driver (defendant) is not fair, there are actions of the pedestrian (the victim) that can influence the accident as much as the driver can. Introducing