Non-existence of equilibria under liability rules when due care is set at a level greater than the optimal level

Kaushal Kishore

Abstract


This paper explores some aspects related to excessive due care level greater than the optimal level under some liability rules. If the due care level is set at a level greater than optimal level, pure strategy Nash Equilibrium, which represents the equilibrium behaviour of rational parties involved in an interaction, may not exist in some cases under some liability rules. In this paper, negligence rule, negligence rule with defence of contributory negligence and strict liability with defence of contributory negligence have been discussed.

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