Rule Definition Injurer Incentive Victim Incentive LIABILITY SUMMARY No Liability Victim bear all costs Injurer bears no liability Undertakes wxi Value minimizing wxi xi 0 No incentive to take any precaution Private cost E SC wxv p x A Minimize private cost by choosing precaution that minimizes social cost xi Incentive to take efficient level of precaution Incentive to take precaution to minimize cost Xi Xi Xi Bear cost of precautionary activity expected social cost of accident E SC wxv p x A Choose xv xv to minimize private cost Xv efficient level of precaution Expected cost 0 Private cost cost of any precautionary activity wxv Minimize private cost xv 0 No incentive to take precaution Internalize all accident costs E SC choose amount that minimizes cost xv xv Unilateral Injurer Inefficient Injurers can only take x xi Xi 0 X Unilateral Victim Efficient Victims can only take x xv Xv X Bilateral Inefficient Take x x xi xv X x 0 xv Efficient Injurers can only take x xi Xi X Inefficient Victims can only take x xv Xv 0 X Inefficient Take x x xi xv X x xi 0 Efficient Inefficient Efficient Incentive to take precaution to minimize cost Xi Xi Xi Internalize all accident costs E SC choose amount that minimizes cost xv xv Inefficient Inefficient Efficient Private cost curve kinked at xi xi Incentive to take precaution to minimize cost Xi Xi Xi Incentive to take precaution b c bear all costs Private cost curve E SC Choose xi xi Internalize all accident costs E SC choose amount that minimizes cost xv xv No incentive to take precaution As long as victim chooses xv xv bears no costs Private cost curve kinked at xv E SC if xv xv and wxv if xv xv Choose xv xv to minimize cost Inefficient Inefficient Efficient Inefficient Efficient Efficient Strict Liability Injurers liable for all accident costs Victims bear no liability fully compensated Negligence Negligence w Contributory Negligence Comparative Negligence Strict Liability w Contributory Negligence Due care standard x efficient level of precaution x Xi Xi injurer negligent and must pay all accident costs E SC curve all values of xi 0 xi Xi Xi injurer not negligent Private cost wxi All values of xi xi Even if injurer was negligent injurer may avoid liability if the victim was also negligent Injurer is negligent victim not injurer liable for all costs xi xi AND xv xv Either injurer is not negligent or victim is negligent victim bear all cost xi xi or xv xv Divides accident cost between injurer and victim when both satisfy due care standard Injurer liable for accident costs regardless of whether he she was negligent provided that victim was not also negligent Imposes due care standard on victims only If victim is not negligent injurer liable for all costs xv xv Victim negligent injurer not liable for any costs xv xv