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This paper shows that the rule of comparative negligence with relative fault – a sharing of the loss proportional to the parties’ relative departures from due care – induces the parties to an accident to be efficiently negligent. Comparative negligence is more efficient than simple or contributory negligence regimes because it serves as a buffer against excessive due-care standards. If due-care standards are too high, comparative negligence facilitates efficient negligence, inducing parties to violate excessive due-care standards only when this is socially desirable. If due-care standards are too low, all negligence rules perform in the same way. Of all possible comparative negligence rules, relative fault provides for the sharing rule that maximizes this effect. The same principle also applies to the contribution rule among multiple tortfeasors.

Relative Fault and Efficient Negligence: Comparative Negligence Explained