Negligence with a Defense of Contributory Negligence
Simple Negligence with due care level = high
Seller minimizes private cost by selecting care level
Private cost = with low care
Private cost = with high care
If the buyer can tell/assess the risk perfectly
Value > Total cost of consumption ( price + expected harm) buy.
Otherwise, not buy.
What happens if the buyers believe the risk is , regardless of the actual care level provided by the restaurant?
No Liability Case:
When consumers can accurately assess risk sellers know consumers will choose buy or not based on total consumption cost (price +expected harm)
Low (perceived total cost of consumption)
High
Restaurant will choose high level of care to attract more consumers
Efficient
When consumers know only the average risk in the market, not the risk from consuming in a particular restaurant.
No incentive to increase the care. That means every restaurant will choose the low level of care.
Consumers are ignorant