Several liability with sequential care: an experiment

By a laboratory experiment, we investigate the incentives of potential tortfeasors to make investments in order to reduce the probability of a given harm occurring. In our experiment, paired players make their decisions sequentially, i.e. , a la Stackelberg and in case of a harm, they share liability, either symmetrically or asymmetrically. We vary their level of endowments so that one can become insolvent in case of harm, and show that subjects do not behave as predicted, due to considerations such as inequity aversion or reciprocity. We find that the first-acting tortfeasor does not exploit their advantage fully and invests much more than predicted. Our results also show that the second-acting tortfeasor acts reciprocally with the other, rather than rationally opting for their best response. Finally, we show that asymmetric liability apportionment may restore the incentives to invest for the first tortfeasor, and that insolvency of the second one pushes the first to overinvest in order to avoid harm.