Liability for Insufficient Risks

Inconventional tort literature has long maintained that negligence-based rules induce parties to take optimal care but, at the same time, to maximize their private payoffs by engaging in excessive activity levels. This Article, however, suggests that existing tort theory is incomplete. It shows that parties subject to a negligence standard may often increase their payoffs by choosing suboptimal care together with insufficient activity levels. By deliberately lowering their level of activity, parties may create insufficient risks that relieve them of the duty to invest in socially desirable precautions. This overlooked problem of sub-optimal care and insufficient activity, it is shown, has important policy implications. It supports the application of a new form of liability- liability for insufficient risks, recommends the design of regulations that require minimum activity levels, and sheds new light on the choice between negligence and strict liability.