The attempts to improve automobile safety by installation of various safety devices on automobile may be offset by drivers' optimal response to the devices. Most aspects of risk taking and insurance-related decisions by drivers depend on the relations between the choice of individual precautions and the choice of automobile safety levels. This article indicates that the changes in safety levels have ambiguous effects upon changes in rates of fatal accidents since more safety of cars dilutes the incentive to exercise care. An empirical data set observing traffic accidents on Japanese highways imply some saving of auto occupants' lives by safety devices, the supplemental restraint air bag system, at the expense of more nonfatal accidents; these findings are consistent with drivers' offsetting behaviour to automobile safety regulation. (A)
Abstract