The Unilateral Accident Model

The present paper reviews the foundations of the unilateral accident model under a universe of uncertainty where agents are sensitive to “ambiguity”. Initiated by Ronald Coase (1960) and developed by Calabresi (1970), Brown (1973) and especially Shavell (1980), (1982), (1987b), the standard unilateral accident model constitutes the backbone of the economic analysis of tort law. Initially, created by lawyers and judges, tort law legally forces the wrongdoers to compensate their victims’ losses. Law and Economics stream showed that, beyond compensation, the prospect of paying heavy repairs to victims motivates potential tortfeasors to provide the highest prevention level against risk. Hence, the model is simple: a potential wrongdoer performs

However, it differs from this well-known literature because, first, uncertainty does not prevent the formation of a socially optimal care level and this is true for strict liability. Second, strict liability and negligence cannot be easily compared but under special conditions. Indeed, enforcing a given liability regime strongly influences the injurers’ behavior. For instance, the institutionalizing negligence involves allocating the Court a higher status than under strict liability because the injurers will refer to the judges’ decisions who “makes” the socially first best care level. Consequently, this issue introduces some strong asymmetry between both regimes. This comes from the nature of the regulator’s utility function. The latter is of Negishi (1960)’s type.. This means that the social utility function aggregates the agents’ preference conversely to the usual models that consider a neutral to risk, dictatorial regulator. Furthermore this one is benevolent and

Thus, uncertainty integrates the accident probabilities (Teitelbaum (2007)), but also the agents’ beliefs about the scale of damage. Indeed, a harm extent is generally unknown. Then this one is included in an interval and agents form beliefs about it and ambiguity about the issue (the scope of an accident is fundamental). Furthermore, ambiguous feelings concern both the polluters (as in Teitelbaum (2007), Langlais (2012), Franzoni (2012)), and the victims.

However, this model does not examine in depth the issue of equivalence of a strict liability regime versus negligence by considering the distortions of appreciation between regulator and court, for example, or errors made by the judges. Pursuing such a discussion on this topic would lead us too far (see Sommer (1983), Shavell (1980 b), Polinsky