In the presence of scientific uncertainty many actions may end up in a catastrophic event. Many argue that in such cases the precautionary principle should be adopted. Unfortunately this principle is not clear-cut. The main purpose of this paper is to set up a model, which allows establishing...

The present paper provides an economic analysis of vicarious liability that takes information rents and monitoring costs to be borne by the principal explicitly into account. In the presence of information rents or if the principal is wealth constrained herself, vicarious liability need not...