ABSTRACT

This chapter considers the incentives created by a simple negligence rule in a sequential accident setting. This rule creates incentives for both parties to be careful in simultaneous accidents, assuming the due standard is set at the injurer's efficient level of care. The chapter discusses three criteria for efficient behavior in sequential care accident settings. The first two of these criteria are applied to simultaneous move accidents when asking whether two parties acting in ignorance of each other's choices have an incentive to take efficient care. Third criterion concerns the incentives of a party to respond to prior negligence by taking more than "ordinary" precaution to avoid an accident. It is possible to show that under the negligence rule, both parties have an incentive to act efficiently, and the injurer, acting second, also has an incentive to take compensating precaution in the face of prior negligence by the victim.