Varying Injurer Costs of Care, Negligence, and Self-Selection

Standard economic models of negligence set a single standard of care to which all injurers must conform. When injurers differ in their costs of care, this leads to distortions in individual care choices. This paper derives the characteristics of a negligence rule that induces optimal care by all injurers by means of self-selection. The principal features of the rule are (1) the due standard is set at the optimal care of the lowest cost injurer, and (2) liability increases gradually rather than abruptly as care falls below this standard. The results are consistent with the gradation in liability under certain causation rules and under comparative negligence.

A Tort for Risk and Endogenous Bankruptcy

Conventional tort law bars victims of exposure to a toxic substance from filing suit until they actually develop symptoms of illness. Practically speaking, this rule often bars recovery due to bankruptcy and causal uncertainty. One solution is to allow victims to file at exposure for expected damages (a tort for risk). The trade-off is that such a rule may trigger a race to file among exposure victims, thereby itself inducing bankruptcy. This paper characterizes the conditions under which such a race will occur in equilibrium and examines the implications for social welfare.

C4I Roadmap March 2005

Patients expect to be safe from harm inside the walls of a hospital. Increasing reports of medical errors and adverse events have brought these concerns to public attention. Although we have celebrated many scientific advances over the past several decades, many patients do not benefit because the healthcare infrastructure is inadequate to deliver care to all. Studies confirm opportunities to improve in areas such as inpatient vaccination for flu and outpatient screening for breast, cervical or colon cancer. (Institute of Medicine, (IOM), 2000, 2001, 2004). This document outlines the steps needed to further increase our focus on patient safety in John Dempsey Hospital through the development of a multi-disciplinary Collaborative Center for Clinical Care Improvement (CCCCI). The dimensions of safety and outcomes are briefly discussed to provide some perspective on the scope of these challenges (Strongwater, 2003).

Salvaging Historic Shipwrecks

The salvage of historic shipwrecks involves a debate between profit-oriented salvagers, who wish to maximize profit, and archeologists, who wish to maximize historical value. We use a principal-agent model to derive the optimal reward scheme for salvagers, including a minimum duty of care in conducting the salvage operation. A review of U.S. and international law suggests that, while there is an emerging recognition of the need to devote greater care to salvaging those wrecks that are located, current doctrines provide inadequate incentives to locate historic wrecks in the first place.