Abstract
The principle of ‘full’ compensation is said to restore the victim of an accident to the position he was in before the tort. The conventional ‘pre-tort position’ of the victim is taken to be the one in which he bears no accident losses at all. Therefore, a negligent injurer is required to compensate his victim fully. In an interesting paper in this journal, Van Wijck and Winters (2001) have reinterpreted the ‘pre-tort position’ of the victim, and proposed an ‘alternative’ specification of liability for the purpose of compensation. We study the relative merits of the two compensation criteria. We show that while the alternative compensation criterion is indeed insightful from economic as well as legal point of view, at the same time it suffers from some serious limitations.
Similar content being viewed by others
References
Baird, D. G., Gertner, R. H., & Picker, R. C. (1994). Game Theory and the Law, London: Harvard University Press.
Carney, W. J. (2000). “Limited Liability' in Encyclopedia of Law and Economics.” B. Bouckaert & G. De Geest (eds.), Cheltenham: Edward Elgar, pp. 659–691.
Cooter, R. D. & Ulen, T. S. (1998). Law and Economics, 2nd edn., New York: Addison-Wesley.
Emons, W. (1990). “Efficient Liability Rules for an Economy with Non-Identical Individuals.” Journal of Public Economics. 42, 89–104.
Emons, W. & Sobel, J. (1991). “On the Effectiveness of Liability Rules When Agents are Not identical.” Review of Economic Studies. 58, 375–390.
Endres, A & Ludeke, A. (1998). “Limited Liability and Imperfect Information-On the Existence of Safety Equilibria Under Products Liability Law.” European Journal of Law and Economics.5,153–165.
Grady, M. F. (1988). “Discontinuities and Information Burdens: Review of the Economic Structure or Tort Law by William M. Landes and Richard A. Posner.” George Washington Law Review. 56, 658–678.
Halpern, P. (1998). “Limited and Extended Liability Regimes.” In The New Palgrave Dictionary of Economics and The Law.Macmillan Reference Limited, pp. 581–91.
Hart, H. L. A. & Honore, T. (1985). Causation in the Law. 2nd edn., Oxford: Oxford University Press.
Honore, T. (1997). “Necessary and Sufficient Condition in Tort Law.” In D. G. Owen, (ed.), Philosophical Foun-dations of Tort Law. Oxford: Clarendon Press.
Kahan, M. (1989). “Causation and Incentives to Take Care under the Negligence Rule.” Journal of Legal Studies. 18, 427–447.
Kaplow, L. (1998). “Accuracy in Adjudication.” In The New Palgrave Dictionary of Economicsand The Law. Macmillan Reference Limited, pp. 1–7.
Kaplow, L. & Shavell, S. (1999). “Economic Analysis of Law.” NBER Working Paper. No. 6960.
Keeton, W. Page (ed.) (1984). Prosser and Keeton on the Law of Torts, St. Paul, Minn: West Publishing Company.
Maresinis, B. S. & Deakin, S. F. (1994). Tort Law, Oxford: Clarendon Press.
Miceli, T. J. (1997). Economics of the Law: Torts, Contracts, Property, Litigation, Oxford: Oxford University Press.
Shavell, S. (1987). Economic Analysis of Accident Law, Cambridge MA: Harvard University Press.
Singh, R. (2003). “Efficiency of 'Simple' Liability Rules WhenCourts Make Erroneous Estimation of the Damage,” European Journal of Law and Economics. 16, 39–58.
Singh, R. (2002). “Causation-consistent' Liability, Economic Efficiency and the Law of Torts.” CDE, Delhi School of Economics Working Paper. Series No 107.
Van Wijck, P. V. & Winters, J. K. (2001). “The Principle of Full Compensation in Tort Law.” European Journal of Law and Economics. 11(3), 319–332.
Author information
Authors and Affiliations
Rights and permissions
About this article
Cite this article
Singh, R. ‘Full’ Compensation Criteria: An Enquiry into Relative Merits. European Journal of Law and Economics 18, 223–237 (2004). https://doi.org/10.1023/B:EJLE.0000045083.39477.bc
Issue Date:
DOI: https://doi.org/10.1023/B:EJLE.0000045083.39477.bc