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Controlling Product Risks when Consumers Are Heterogeneously Overconfident: Producer Liability versus Minimum-Quality-Standard Regulation

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Contributing to the literature on the consequences of behavioral biases for market outcomes and institutional design, we contrast producer liability and minimum-quality-standard regulation as alternative means of social control of product-related torts when consumers are heterogeneously overconfident about the risk of harm. We elucidate the role of factors shaping the relative desirability of strict liability vis-à-vis minimum-quality-standard regulation from a social welfare standpoint. We also clarify when and why joint use of strict liability and minimum-quality-standard regulation welfare dominates the exclusive use of either mode of social control of torts.
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Document Type: Research Article

Publication date: 01 June 2016

This article was made available online on 07 March 2016 as a Fast Track article with title: "Controlling Product Risks when Consumers Are Heterogeneously Overconfident: Producer Liability versus Minimum-Quality-Standard Regulation".

More about this publication?
  • Founded as Zeitschrift für die gesamte Staatswissenschaft in 1844.

    As one of the oldest journals in the field of political economy, the Journal of Institutional and Theoretical Economics (JITE) deals traditionally with the problems of economics, social policy, and their legal framework. JITE is listed in the Journal of Economic Literature, the Social Science Citation Index, the International Bibliography of the Social Sciences, and COREJ.

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    From 2013 on all accepted articles are published in an Online First version (in their final layout) to make them searchable and citable by their DOI immediately after peer review and acceptance. Once the article is published in an issue of the journal, the Online First version will be removed.

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