Precaution incentives in accident settings

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Law and economics has emerged as a significant sub-discipline, with the economics of tort law being a focal point of study. This analysis revolves around the internalization of external effects through liability law, which allocates liability based on the behavior of parties involved in accidents. The established framework, shaped by influential works such as Calabresi (1970) and Brown (1973), compares outcomes related to care-taking and activity levels under various liability rules to socially desirable outcomes, typically aiming for wealth maximization. The central theory suggests that liability rules can promote optimal behavior among parties, provided certain core assumptions are met. Following the establishment of this theory, researchers began to explore the robustness of these conclusions by varying the core assumptions. The existing literature on tort law economics is extensive and varied, yet many questions remain unanswered, warranting further scholarly exploration. This book contributes to that endeavor by examining different subjects from a theoretical perspective across a collection of chapters.