PS7 - reduced to 3 drinks or if the speed limit was reduced...

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Legal Studies 145 - Law and Economics I P ROBLEM S ET #7 Virginia Smith, an undergraduate at Berkeley, and a competitive runner, was running on one of the streets adjacent to the University campus. She was seriously injured when hit by an automobile driven by a local businessman, George Johnson. Johnson was cited by a local police officer for driving under the influence of alcohol. It subsequently became apparent, however, that Ms. Smith was running on a heavily traveled street in the early evening and had failed to wear a reflective vest or any highly visible kind of clothing. The injury to Ms. Smith is likely to limit her future athletic career, but the associated damages are not well known at this time. 1. Suppose that 20 years ago the legal speed limit was 25 miles per hour and the legal alcohol limit for drivers was equivalent to about 4 drinks. Public policy studies estimated that most accidents such as this could be avoided if either the legal alcohol limit was
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Unformatted text preview: reduced to 3 drinks or if the speed limit was reduced to 15 miles per hour. Economic advisors recommended the former over the latter. Why do you suppose this was? What efficiency considerations are used to determine the appropriate standard of care? From this perspective, do you think the driver, Johnson, was negligent in this case? How about the runner, Smith? 2. Using the analysis suggested above, why might an economist argue that athletes, such as Smith, should be held to a higher standard of care than other pedestrians? 3. Consider both the common law rule of negligence and the rule of negligence with a contributory negligence defense. Which of these laws, if any, generates an incentive for both parties to take efficient precaution? 4. Which laws, if any, generate an incentive for both parties to choose their activity levels efficiently?...
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