This paper examines auditor liability rules under imperfect information,costly litigation and risk averse auditors. A negligence rulefails in such a setting, because in equilibrium auditors will deviatewith positive probability from any given standard. It is shown thatstrict liability...

We analyze the role of liability, insurance, and side payments for independent safety controls with unobservable care levels. By independent safety controls we mean that the accident probability depends on the care levels of two parties, and that the effects of the controls on the accident...

This paper examines auditor liability rules under imperfect information, costly litigation and risk-averse auditors. A negligence rule fails in such a setting, because in equilibrium auditors will deviate with positive probability from any given standard. It is shown that strict liability...