The Reasonable Person Negligence Standard and Liability Insurance

14 Pages Posted: 22 Jun 2007

See all articles by Vickie L. Bajtelsmit

Vickie L. Bajtelsmit

Colorado State University, Fort Collins

Paul D. Thistle

University of Nevada, Las Vegas - Department of Finance

Multiple version iconThere are 2 versions of this paper

Date Written: June 2007

Abstract

We show that, under the reasonable person negligence rule, heterogeneity of potential injurers can be sufficient to create a demand for liability insurance. Potential injurers with a low probability of accidents or a high cost of exercising care have optimal levels of care that are below the negligence standard. For these groups, it may be less costly to be negligent and purchase insurance than to comply with the negligence standard. We show that the availability of insurance is socially desirable.

Keywords: tort, screening

JEL Classification: G22, K13

Suggested Citation

Bajtelsmit, Vickie L. and Thistle, Paul D., The Reasonable Person Negligence Standard and Liability Insurance (June 2007). Available at SSRN: https://ssrn.com/abstract=995816 or http://dx.doi.org/10.2139/ssrn.995816

Vickie L. Bajtelsmit

Colorado State University, Fort Collins ( email )

Fort Collins, CO 80523-1771
United States

Paul D. Thistle (Contact Author)

University of Nevada, Las Vegas - Department of Finance ( email )

4505 S. Maryland Parkway
Las Vegas, NV 89154
United States
702-895-3856 (Phone)
702-895-4650 (Fax)

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
138
Abstract Views
1,487
rank
266,432
PlumX Metrics