Diagnoses and Medical Malpractice: A Comparison of Negligence and Strict Liability Systems

This article examines the incentive structures that the negligence and strict liability systems provide for physicians. Other articles have analyzed the effects of these rules when an increase in care will reduce the probability of an accident. In a large class of decisions, a physician cannot reduce the probability of an accident by increasing care. He can reduce the probability of one type of accident only by increasing the probability of another. It is shown that for this class of decisions, the negligence system is more effective than strict liability in altering the decisionmaker's utility function to reflect social costs.