The John M. Olin Center

Paper Abstract

731. Steven Shavell, A Fundamental Enforcement Cost Advantage of the Negligence Rule over Regulation, 09/2012; subsequently published in The University of Chicago Journal of Legal Studies, Vol. 42 (June 2013).

Abstract: Regulation and the negligence rule are both designed to obtain compliance with desired standards of behavior, but they differ in a primary respect: compliance with regulation is ordinarily assessed independently of the occurrence of harm, whereas compliance with the negligence rule is evaluated only if harm occurs. It is shown in a stylized model that because the use of the negligence rule is triggered by harm, the rule enjoys an intrinsic enforcement cost advantage over regulation. Moreover, this advantage suggests that the examination of behavior under the negligence rule should tend to be more detailed than under regulation (as it is).


 

731 PDF