1. Are subrogation clauses efficient? Be sure to review your answer in light of the section below about litigation costs and their effect on the efficiency of the tort liability system.
2. Use the economic theory of bargaining to characterize the torts in which the transaction costs of settling disputes are likely to be large.
3. For which liability standard would you expect the litigation costs to be greater—negligence or strict liability? Why? Is that an additional efficiency argument for preferring one standard to the other?