Citation

Liao Y, White MJ. Am. Law Econ. Rev. 2002; 4(2): 258-294.

Copyright

(Copyright © 2002, Oxford University Press)

DOI

10.1093/aler/4.2.258

PMID

unavailable

Abstract

This article compares incentives and efficiency under the pure tort system (the comparative negligence rule) to those under pure and mixed no-fault systems. Under no-fault systems, drivers are allowed to opt out of no-fault and file lawsuits if their damages exceed a certain threshold. We find that no single liability system always dominates on efficiency grounds, but the pure tort system does best when costs of care are low, and pure no-fault does best when costs of care are high. Choice systems, in which drivers choose between no-fault or pure tort systems, lead to less efficient results because drivers choose the pure tort rule too often.