We analyze liability rules in a setting where injurers are potentially insolvent and where negligence standards may deviate from the socially optimal level. We show that proportional liability, which sets the measure of damages equal to the harm multiplied by the probability that it was caused...

We analyze liability rules in a setting where injurers are potentially insolvent and where negligence standards may deviate from the socially optimal level. We show that proportional liability, which sets the measure of damages equal to the harm multiplied by the probability that it was caused...

When people face risk of death, they over invest in risk reduction: first, they discount their risk-reduction costs by the probability of death; second, they consider the consumption of their wealth as a benefit from risk reduction. From a social perspective, people’s wealth remains after...

This paper studies alternative care situations in which the injurer is liable for harm but the victim is only partially compensated for her losses, for example, because the accident will result in serious bodily injury or death. In these situations, liability gives rise to multiple equilibria,...