Victim Interdependence in the Accident Setting

This paper considers the case that potential victims affect each other by taking care. Analyzing standard liability rules, we show that strict liability with a defense of contributory negligence is in the best position to induce the efficient outcome, i.e., this liability rule ensures efficiency if victims affect each other negatively - care by one victim increases the accident exposure of other victims - and makes the attainment likely if victims affect each other positively - if care by one victim decreases the accident exposure of other victims. In contrast, the other standard liability rules fail to induce first-best care.