Compensation for Torts of Necessity: The Law and Economics View  

by Enrico Baffi

This paper seeks to propose a new interpretation of the rules that envisage compensation, be it damages or an indemnity, when a person takes an action in a case of necessity. The person acting out of necessity will also take into account the sum of money that he will be required to pay if the necessary action is taken and this will consequently affect his choices. Moreover, the amount of the damages or indemnity will also have an effect on the choices that the victim will make. More specifically, it will be shown that in certain situations compensation should ideally be equal to the loss actually suffered by the victim while in others optimal compensation could even be a figure equal to zero and in any case not such as to cover the entire loss suffered by the victim. This incentive-based interpretation suggests that certain compensation rules that until now have been considered efficient by scholars of law and economics are actually inefficient.

DOI 10.23815/2421-2156.ITALJ           ISSN 2421-2156

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