Precaution, compensation, and threats of sanction: The case of alcohol servers

This study used data from a national sample of bar owners or managers and employees at these establishments to look at the following issues. To what extent does the imposition of liability affect employees' incentive to take care? Do various liability rules affect employees' serving practices? And does how the employees were paid make a difference? Employees received higher pay when they engaged in serving practices that may lead to driving under the influence of alcohol (DUI), but pay did not increase when they engaged in behavior that may decrease DUI. Employees were less likely to engage in irresponsible behaviors when the perceived threat of a lawsuit by the owner/manager was relatively high. However, tort liability only affected some forms of precautionary behaviors. Based on our analysis, administrative and criminal law overall appears to be ineffective deterrents. The deterrent effects of lawsuits may also diminish when alcohol servers are mostly paid through tips. © 2004 Elsevier Inc. All rights reserved.

Duke Scholars

Author Frank A. Sloan Economics