Question: How to do the question ? Table 2 For this question, A = 200; both the (potential) injurer and the (potential) victim can take care;

How to do the question ?

How to do the question ? Table 2 For this question, A

Table 2 For this question, A = 200; both the (potential) injurer and the (potential) victim can take care; and there are only two levels of care available: "none" and "care". Injurer's Victim's Injurer's |Victim's Total cost Probability of Expected Total social level of level of cost of accident cost cost of of care loss care care care care yi yv Cili Cvyv Prob(yi, Vv) None None 0 0 20% Care None 4 0 12% None Care 0 3 17% 5% Care Care 4 3 a) Fill in the blanks in Table 2 above. b) Given this table, what is the socially efficient level of care? Why? c) Which of the following rules would provide the incentive(s) for injurer and victim to provide the socially efficient level(s) of care: i ) Strict liability on the part of the injurer ii) No liability on the part of the injurer iii) Negligence d) Carefully explain your justification for each of the 3 possibilities

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