The traditional doctrine of respondent superior is

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The traditional doctrine of respondent superior is fully in accord with this analysis since it appears to tie vicarious liability explicitly to the principal’s costs of monitoring or otherwise controlling employee behavior (Landes and Posner, 1987, p. 208). For example, agency law determines the principal’s tort liability based not only on her capacity to monitor her agent’s actions but also on her ability to contractually alter her agent’s incentives, as when the scope of employment rules condition vicarious liability on whether the culpable agent acted, at least in part, to benefit his principal (Restatement (Second) of Agency, 1958, §228(1) (c)). Apart from inducing principals to control agent misconduct through monitoring and preventive measures, vicarious liability can also force principals to internalize the costs of misconduct when agents are judgment- proof. In the private sector, at least, forcing firms to internalize the costs of misconduct that accompany their productive activity leads, other things being equal, to an efficient scale of production by bringing the private costs of production into line with the social costs (for example, Shavell, 1980; Kramer and Sykes, 1987, p. 286). Thus, even if corporate principals cannot control caretaking by agents, vicarious liability can ensure that they at least face the full expected costs of accidents or wrongdoing, and thus do not undertake too much risky activity - providing, of course, that their agents are also strictly liable for the underlying harms at issue (Polinsky and Shavell, 1993). As Shavell (1987, pp. 173-174) notes, moreover, several other considerations favor a rule of corporate vicarious liability as well, especially when contracting between principals and agents is constrained and there are limitations such as solvency on the effective liability faced by agents. First, principals may be better informed than agents about accident risks, or better able to limit these risks by reorganizing the workplace. Second, principals - and particularly firms - may be better able to monitor and discipline agents than the courts. Thus, vicarious liability may be socially advantageous if principals are less likely than courts to err in reviewing agent conduct. Third, principals may be more attractive targets of liability as a consequence of what Kornhauser (1982, pp. 1370-1371) terms the problem of ‘multiple agents’. That is, an outside plaintiff may find the task of determining which of a firm’s many agents has caused a tort extremely costly, even when one of the firm’s agents is clearly responsible. But if the firm faces liability, it may be able to locate and discipline the culpable agent - or, even if it cannot, it may be able to reduce tort costs through other means such as training programs or screening measures. Fourth, as most commentators acknowledge, shifting liability to principals under a vicarious liability rule is likely to reduce risk bearing costs, at least in
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