Ogden & Hylton on Incentives to Take Care Under Contributory and Comparative Fault

Benjamin Ogden (Boston University-Economics) and Keith Hylton (Boston University) have posted to SSRN Incentives to Take Care Under Contributory and Comparative Fault.  The abstract provides:

Previous literature on contributory versus comparative negligence has shown that they reach equivalent equilibria. These results, however, depend upon a stylized application of the Hand Formula. We show that, under a correct application of the Hand Formula, there are differences between the two regimes: under bilateral harm, comparative negligence generates greater incentives for care, but this care occurs only when care is not socially optimal. By contrast, under unilateral harm or asymmetric costs of care, contributory negligence creates more care, but only when such care is not socially optimal. Therefore, it is possible to socially rank negligence regimes depending upon the symmetry of potential harm and costs of care. We discuss a potential reform the court could undertake, the Retrospective Negligence Test, that when applied in the case of bilateral harm would make comparative negligence optimal.