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Stephen Diamond's avatar

It internalizes considerably more than the entire harm. First (which I haven't remarked on yet) the victims pay for their own damages even if their harm was not their fault at all. (So, they internalize harm they did not cause.) This is probably a more significant point than my comparable one about contributory negligence, but together with the double payment for harms caused by contributory negligence, it shows that the best estimate of the amount of harm with same available information is a proper fraction of the payments you propose.

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RobinHanson's avatar

"make all responsible parties pay the damage levels of all other parties hurt by the accident" when we add a payment for those other damages to one's own damage, one does internalize the entire harm.

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