The Economic Analysis Of Judgement-Proof Problem

This thesis studies one particular phenomenon in torts---judgement-proof using the approach of law and economics, explores how judgement-proof problem come into being, and seeks the best policy or law-making under all kinds of assumptions and institutional condition on the view of ex ante and ex post efficience.This research is based on decision-making theory under uncertainty and information economics.On view of ex ante effience, the thesis gives some characters of judgement-proof, and compares efficience of different kinds of liability rules, then studies judgement-proof problem under moral-hazard and advers selection. On view of ex post efficience, the thesis inquires into the best program of compensation for victims. As an theoretical research, the thesis not only emphasizes generalization of this problem, but also pays attention to the performance under developing countrys, especially our country-China’s institutional conditions, provides economic analysis and some proposes of policy.There are two important assumptions in traditional tort economic models. The first assumption is that torfeasor have enough assets to cover the damage of victims; the second assumption is that both torfeasors and victims have accurate knowledge about the probability of tort accident, and according to this knowledge make right decisions based on subjective expected utility theory. But the situation in real life cannot always satisfy these assumptions. Judgement-proof problem cannot underpin the first assumption, the torfeasor will strategicly proof the judgement to avoid compensate victims. Judgement-proof will have negative effect on incentive to torfeasor’s effort to preventing tort accident. It will even exercise more malign influence on the victims under torfeasor’s wrong knowledge about the probability of tort accident.Along this way, after reviewing the literature of judgement proof problem, the thesis provides a foundmental judgement-proof economic model of tort law based on Choquet expected utility theory, and arrives at some results that are different from the result of traditional economic model of tort law. Firstly, uncertainty reduces the torfeasors’incentive to prevent torts under strict liability. Secondly, when negligence standards were set on the social optimal level under liability for negligence, uncertainty can not only affect the torfeasors’care level, but also be relation to the attitude to uncertainty of torfeasors.If the torfeasor is optimist, the care level would more probably be social optimal level, if the torfeasor is pessimist, this probability that his care level equals social optimal level would be lower. Thirdly, under the assumptions, this article gives two policies to handle with judgement proof problem:the minimum asset standard and Pigovian Tax based on adjusting uncertainty attitude.Then the thesis studies judgement-proof problem under moral-hazard and advers selection. The research draws a conclusion that under the bankruptcy law of China, the owner of firm will strategically use judgement proof to avoid compensating the victims. The article argues that infringement creditor’s rights should not prior to other creditor’s rights on perspective of efficiencelastly. The thesis studies the general conditions that pool equibrium and separate equibrium exist in market, the conclusion shows that the law wrongly forbid exculpatory clause. Lastly, the thesis analyzes all kinds of programs of compensation to tort victims, and inquires into the best program of compensation for victims, then proposes a program based on risk equivalence.