This paper investigates the case in which benefits and costs of prevention are sub-ject to uncertainty. It contrasts the conventional policy, that equalizes marginal costs and benefits of prevention once they are known, to the ex ante optimal pol-icy, that accounts for the costs that uncertainty places on the affected parties. The ex ante optimal policy supports the use of a value of a statistical life constant across contingencies, it dilutes the dead-anyway effect, and it responds to the preventers’ level of prudence. It deviates from the conventional policy by pre-scribing less prevention in contingencies characterized by high compliance costs and a high probability of injury.

Prevention Policy in an Uncertain Environment

Franzoni L. A.
2022

Abstract

This paper investigates the case in which benefits and costs of prevention are sub-ject to uncertainty. It contrasts the conventional policy, that equalizes marginal costs and benefits of prevention once they are known, to the ex ante optimal pol-icy, that accounts for the costs that uncertainty places on the affected parties. The ex ante optimal policy supports the use of a value of a statistical life constant across contingencies, it dilutes the dead-anyway effect, and it responds to the preventers’ level of prudence. It deviates from the conventional policy by pre-scribing less prevention in contingencies characterized by high compliance costs and a high probability of injury.
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11585/894404
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