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define care as e, costs of care as C(e)=e^2 and the accident probability of as p(e)=1-e where the maximum feasible care level is bounded above
define care as e, costs of care as C(e)=e^2 and the accident probability of as p(e)=1-e where the maximum feasible care level is bounded above by e=1. assume that harm H in case of an accident is H=1.
a) what is the efficient level of care?
b) which care level would the potential injurer choose with strict liability?
c) which care level would the potential injurer choose with a negligence rule with a due care level of e=3/4?
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