Liability for robots II: An economic analysis

This is the second of two companion papers that discuss accidents caused by robots. In the first paper (Guerra et al.2021), we presented the novel problems posed by robot accidents, and assessed the related legal approaches and institutional opportunities. In this paper, we build on the previous analysis to consider a novel liability regime, which we refer to as 'manufacturer residual liability' rule. This makes operators and victims liable for accidents due to their negligence - hence, incentivizing them to act diligently; and makes manufacturers residually liable for non-negligent accidents - hence, incentivizing them to make optimal investments in R&D for robots' safety. In turn, this rule will bring down the price of safer robots, driving unsafe technology out of the market. Thanks to the percolation effect of residual liability, operators will also be incentivized to adopt optimal activity levels in robots' usage.