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28 Eur. J.L. & Econ. 1 (2009)

handle is hein.journals/eurjlwec28 and id is 1 raw text is: Eur J Law Econ (2009) 28:1-7 DOI 10.1007/s10657-009-9102-1 Welfare improving ignorance and negligence rule Bruno Deffains - Laurent Franckx Published online: 1 May 2009 © Springer Science+Business Media, LLC 2009 Abstract The literature considers that the ignorance of activity levels by the courts is a major source of inefficiency to minimize the social costs of accidents. In this paper, we show that the inefficiency of the negligence rule based on a standard of care (and correlatively ignoring the activity level) is not established if certain dimensions of care are not verifiable. In other words, if care and activity levels are the only relevant variables of the injurer's set of actions to reduce the risk ofacci- dent, it is true that inefficiency arises when the court ignores one element of this set. But, considering that some dimensions of care are in practice not verifiable, it can be efficient for the judge not to take into account the activity level of the defendant. We propose a simple model with three variables: observable and unobservable pre- cautionary measures and activity level. Keywords Liability rules - Information - Ignorance - Negligence JEL Classification K13 1 Introduction An important distinction that has emerged from the economic analysis of tort law is the difference between levels of care (i.e. the precautions an actor takes when engaging in an acivity) and activity levels (i.e. the actor's decisions about wether B. Deffains (E) EconomiX, CNRS and University of Paris Ouest, Paris, France e-mail: Bruno.Deffains@u-parisl0.fr; Bruno.Deffains@univ-nancy2.fr L. Franckx Department Strategic Policy Advice, ARCADIS Belgium nv, Antwerpen, Belgium e-mail: Laurent.Franckx@rma.ac.be _ Springer