Suppose that an injurer escapes liability in three out of
four accidents that he causes. Let the...

Question

Suppose that an injurer escapes liability in three out of
four accidents that he causes. Let the average damages per accident be $100,000
and assume the liability rule is strict liability.

(a) In order for the injurer to face the correct incentives
to take care, what should his total damages be in each case where he is held
liable? 

(b) What portion of total damages is compensatory and what
portion is punitive?

Komalavalli · Accepted Answer

a)
Average damage per accident = $100,000
Liability to pay for 3 out of 4 accidents
Total damage in each case which he is liable = $100,000*3 =$300,000
b)
Portion of total damages is compensatory is $100,000*3 = $300,000
Punitive damage = total damages in 4 accident = 100, 00*4 = $400,000

Suppose that an injurer escapes liability in three out of four accidents that he causes. Let the average damages per accident be $100,000 and assume the liability rule is strict liability. (a) In...

Solution

Answer To This Question Is Available To Download

Related Questions & Answers

Submit New Assignment