Bajtelsmit, Vickie; Thistle, Paul D. - In: Journal of Risk & Insurance 75 (2008) 4, pp. 815-823
We show that, under the reasonable person negligence rule, heterogeneity of potential injurers can be sufficient to create a demand for liability insurance. Potential injurers with a low probability of accidents or a high cost of exercising care have optimal levels of care that are below the...