We study the standard economic model of unilateral accidents, in its simplest form, assuming that the injurers have limited assets. We identify a second-best optimal rule that selects as due care the minimum of first-best care, and a level of care that takes into account the wealth of the...

In this paper, we make three central arguments. The first important argument questions the implicit assumption of the activity-level effect literature that there is a monotonically increasing relationship between the probability of an accident's occurring and the quantity of the underlying risky...