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Title: Liability Insurance under the Negligence Rule
Authors: Fagart, Marie-Cécile
Fluet, Claude
Keywords: Negligence
Liability insurance
Evidentiary standard
Moral hazard
Judicial error
Decoupling
Prudence
Issue Date: 2007-10
Series/Report no.: Cahiers du CIRPÉE;07-30
Abstract: We analyze the efficiency properties of the negligence rule with liability insurance, when the tort-feasor's behavior is imperfectly observable both by the insurer and the court. Efficiency is shown to depend on the extent to which the evidence is informative, on the evidentiary standard for finding negligence, and on whether insurance contracts can condition directly on the same evidence as used by courts to assess behavior. When evidence is not directly contractible, the negligence rule with compensatory damages is generally inefficient and can be improved by decoupling liability from the harm suffered by the victim.
URI: http://132.203.59.36/CIRPEE/cahierscirpee/2007/files/CIRPEE07-30.pdf
https://depot.erudit.org/id/001088dd
Appears in Collections:Cahiers de recherche du CIRPÉE

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