This article analyzes the socially optimal liability allocation when strictly liable Cournot firms delegate their safety and output choices to managers whose potential biases are chosen by firm owners and consumers misperceive product risks. Firm owners always hire managers who are overconfident about their product safety’s effectiveness in reducing product-related accident risk. However, the extent of overconfidence depends on consumers’ risk perceptions and the allocation of liability. As a result, the socially optimal liability allocation hinges on whether consumers underestimate or overestimate product risk. When consumers overestimate product risks, firms should be held liable for all losses incurred by consumers. However, when consumers underestimate risk, firms should only be held liable for a part of consumer losses. We also show that, in some circumstances, negligence produces socially more desirable outcomes than strict liability (JEL: K13, L13, L14).

中文翻译：

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产品责任和公司所有者对过度自信的经理的委托

本文分析了当严格负责的古诺公司将其安全和产出选择委托给经理时的社会最优责任分配，经理的潜在偏见由公司所有者选择，并且消费者误解了产品风险。公司所有者总是雇用对其产品安全在降低产品相关事故风险方面的有效性过于自信的经理。然而，过度自信的程度取决于消费者的风险认知和责任分配。因此，社会最优责任分配取决于消费者是低估还是高估了产品风险。当消费者高估产品风险时，企业应对消费者造成的一切损失承担责任。然而，当消费者低估风险时，企业只应承担消费者损失的一部分。我们还表明，