Electronic Resource
Springer
The Geneva risk and insurance review
15 (1990), S. 159-169
ISSN:
1554-9658
Source:
Springer Online Journal Archives 1860-2000
Topics:
Economics
Notes:
Abstract Conventional liability rules do not lead to a first best allocation. Optimal bilateral risk control can be achieved by not compensating any losses and, in addition, charging each party a fine equal to the loss suffered by the other party. In this way, each party internalizes the full accident loss. This paper investigates the properties of this “double liability” rule under risk neutrality and risk aversion of the parties. Finally the use of this rule in the context of multiple-party accidents is discussed.
Type of Medium:
Electronic Resource
URL:
http://dx.doi.org/10.1007/BF01489707
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