Economics of Tort Law Flashcards
(29 cards)
Explain the Need for Tort Law
-Addresses compens. wrongs not arising from contract or prop. dispu.
Define what a tort is
- a civil wrong that causes harm 2 a person or prop.
Explain when tortious liability arrises
-breach of du.
-prim. fixed by law
-duty 2wards persons gen.
-breach is redress. by an act. 4 UNLIQ. damages
List types of torts
- Intentional Torts
- Tort of Negligence
- Strict Liability Torts
List the essential elements of a Tort Claim
-breach of duty
-harm
-causation
TRUE or FALSE: Negligence only requires harm and causation
False
List the types of Social Costs
-Cost of precaution
-Cost of Exp. Harm
Explain what Expected Social Cost is
sum of the cost of prec. + cost of exp. harm
Explain the Wealth/ Health Graph in the Event of a Tort (no compensation handed yet)
-curve moves downward
-lower indif. curve
What does the curve in a Wealth/Health graph represent
- indiferrence curve
(all comb. of health and wealth giving same lev. of satisfact.)
Explain the Wealth/Health Graph in the Event of a tort (compensated granted)
-Indifference curve down. ward shifting
-increase health moving right
increase wealth by moving up
-if health irrep. then just shift entire thing upwards in line with health
Explain where the efficient level of precaution can be determined
-point that MINIMISES
-soc. cost
‘For Efficiency, Post-Accident Events Don’t Matter’
- Say damage is 1000
-three scenarios
1. no pay.
2. exact comp.
3. exc. pay.
-total soc. cost remainds the same–> acc. still des. 1000 in value
-j diff. distribu.
TRUE or FALSE: ‘Liability rules matter for post-accident fairness.”
FALSE- total social cost is the same
Explain the Perpetrator’s and victim’s level of precaution in the event of no liability 4 damage
-perp–> non, but if he does he don’t rec. any ben
victim–>bears cost of precaution he takes
Explain the perpetrator’s and victim’s private cost in the event of no liability
-perp: 0, minimised
-victim: p(x)A + wx (bears full SC)
-SC minimised at 0
TRUE or FALSE: Strict Liability allows for efficient precaution by both parties
FALSE: only for injurers
Explain the private cost of the injurer and the victim in strict liability
Injur priv. cost–> p(x) A + wx
-minimised at x= x*
-Victim priv. cost–> wx
-minimised at x=0
Explain the paradox of compensation in the context of bilateral precaution
-Neither strict liability or no liability achieves eff. precau. 4 both parties
-simultan.
Explain what strict liability is
- Injurer pays damag. 4 any accid. he causes
Explain what simple negligence is
-Injurer is liab. only
IF they breached their dut. of reas. care
what is the mathematical representation for the legal standard of care?
x^n
what is the efficient level of precaution in simple negligence
x^n, which is presumably x*
What precuation will the injurer and victim take in simple negligence?
-injurer–> x*
-Victim–> x*
