Oren Bar-Gill and Ariel Porat (New York University (NYU) – School of Law and Tel Aviv University) have posted Beneficial Victims on SSRN. Here is the abstract:
-
In the standard tort case, the injurer-victim interaction results in harm to the victim. In this paper, we identify and analyze a distinct category of cases – beneficial victim cases – in which the injurer-victim interaction, results in both harm to the victim and benefit to the injurer. In other words, the injurer benefits from the presence of the victim. In these beneficial victim cases, which are quite common, standard results about the relative efficiency of different liability rules do not apply. When the benefit to the injurer exceeds the harm to the victim, liability should be imposed, whereas if the harm is larger than the benefit the case for liability becomes much weaker. These conclusions imply, counterintuitively, that it may be more important to impose liability on the non-negligent injurer rather than on the negligent injurer. We study the incentive effects of different liability rules, as well as the restitution rule, in the beneficial victim case. Our analysis also sheds new light on the law of takings.
And from the paper:
-
In particular, while imposing liability on the injurer distorts the victim’s incentives in the standard case, it can improve the victim’s incentives in the beneficial victim case. The intuition for this result is the following: In the standard case, the injurer-victim interaction results only in harm (H) to the victim. Optimal incentives require that the victim internalize the harm, namely, the victim needs to “feel” H. No liability achieves such internalization. In the beneficial victim case, the injurer-victim interaction results both in harm (H) to the victim and in benefit (B) to the injurer, for a net benefit of B – H. Optimal incentives require that the victim internalize both the harm and the benefit, namely, the victim needs to “feel” B – H. Standard liability rules do not achieve such perfect internalization. The question that arises is whether liability does better, or worse, than no liability.
Highly recommended.