Insolvency and Biased Standards -- The Case for Proportional Liability.

Alexander Stremitzer, Avraham Tabbach

Research output: Working paper / PreprintWorking paper


We analyze liability rules in a setting where injurers are potentially insolvent and where negligence standards may deviate from the socially optimal level. We show that proportional liability, which sets the measure of damages equal to the harm multiplied by the probability that it was caused by an injurer's negligence, is preferable to other existing negligence-based rules. Moreover, proportional liability outperforms strict liability if the standard of due care is not set too low. Our analysis also suggests that courts should rely on statistical evidence and bar individualized causal claims that link the harm suffered by a plaintiff to the actions of the defendant. Finally, we provide a result which might be useful to regulators when calculating minimum capital requirements or minimum mandatory insurance for different industries.
Original languageEnglish
Number of pages34
StatePublished - 1 Oct 2009

Publication series

NameWorking Papers -- Yale School of Management's Legal Scholarship Network


  • Liability for work-related injuries
  • Work-related injuries
  • Bankruptcy
  • Business failures
  • Compulsory insurance
  • Actions & defenses (Law)
  • Legal liability
  • Industrial laws & legislation
  • Compensation (Law)
  • court error and misperception
  • disgorgement
  • judgment proof problem
  • proportional liability
  • uncertain causation


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