Four essays on the theory of liability rules

This dissertation consists of four essays in the context of economic analysis of tort law.; Chapter 1 develops an alternative to the existing approach to defining negligence, by revisiting the famous Learned Hand rule. In the orthodox tort liability literature, the standard of care for party A is based on assumed efficient behavior by party B. Based on a review of various tort cases, however, I find that the standard of care for party A is based on actual behavior of party B. With this alternative assumption, the rules of simple negligence, contributory negligence, and comparative negligence do not guarantee efficiency in the continuous care, or discrete and alternative care, or discrete and no care cases; efficiency is achieved only in the discrete and joint care case.; Chapter 2 analyzes United States v. Carroll Towing Co. (1947) in detail. It is shown that Judge Hand's original opinion in that case confirms the conditional-based-on-actual-behavior approach developed in Chapter 1, and it may in fact produce games with inefficient equilibria and some paradoxes.; Chapter 3 modifies the standard tort model by introducing role-type uncertainty. When each party forms a subjective belief on the probability that she becomes an injurer (or a victim) in a possible accident, only the pure comparative negligence and equal division rules turn out to be efficient, with the standard of care set equal to the socially optimal level.; Chapter 4 critiques Jain and Singh's (2002) claim that a condition they call negligence liability is necessary and sufficient for any liability rule to be efficient. First, if we drop their hidden assumption that the liability apportionment between two non-negligent parties is constant for all combinations of non-negligent care levels, the equivalence between negligence liability and the efficiency of liability rules breaks down. Second, their attempt to drop the assumption of uniqueness for the social optimum improves the generality of the model at a substantial cost.