Who Should Be Immune from Tort Liability?

Tort law is generally considered to be an instrument that improves incentives. Yet many people and groups (including firefighters and police officers) enjoy some form of immunity. I show that those who enjoy immunity typically externalize the precaution costs to some degree. I analyze an extension of the standard unilateral accident model (with risk neutrality and fixed activity levels) that includes parameters that capture the degree to which the injurer internalizes precaution costs and expected harm. I find that when injurers externalize precaution costs, strict liability should not be used (as it leads to overprecaution), and negligence rules should be more lenient (because too high due care levels are less likely to be corrected) and more predictable (because uncertainty has a much stronger chilling effect). Therefore, negligence may need to take the form of gross negligence (for example, firefighter liability) or qualified or good-faith liability (for example, constitutional torts).