Customary versus Technological Advancement Tests

In an environment where the optimal level of care is unknown, we ask under a state of the art defense which method is better able to induce parties to undertake optimal care. Assuming courts can see a noisy signal of research activities undertaken by a defendant and some of its competitors, we ask whether courts should use a biased or unbiased average to compare care. We find that the later is better.

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Year of publication:	2006-04-01
Authors:	Deffains, Bruno ; Demougin, Dominique
Subject:	Technische Entwicklung \| Mängelhaftung \| Delikt

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Table of Contents
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1. Introduction
2. The model
3. The firm's decision problem
4. The regulator's problem
5. Further considerations
5.1 The tradeoff between ^ and N
5.2 Guiding the courts
6. Conclusion

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