When Will Judgment Proof Injurers Take Too Much Precaution?

Judgment proof injurers can be expected to take less than optimal precaution, as they bear only a part of the accident loss. However, it has been showed that under certain conditions the judgment proof problem can lead to overprecaution. We argue that overprecaution can never occur in magnitude models (where more precaution only reduces the magnitude of the harm) as opposed to the probability models traditionally used in the literature (where more precaution only reduces the probability of the accident). We also analyze mixed models and discuss the policy implications of our analysis.