Private Law Theory

Introduction:
The model of precaution has become a central tool of law and economics, beginning with Judge Learned Hand’s brilliant opinion in United States v Carroll Towing Co. In it he argues that a defendant should be found liable for harm if and only if the expected cost of additional care is less than the expected benefit. The model of precaution relies upon the economics of incentives, a subfield of game theory — the study of how individuals choose actions when these actions affect others. The landmark books of Professor William Landes and Judge Richard Posner, and Professor Steven Shavell illustrate how the precaution model illuminates a wide variety of legal rules. Professor Guido Calabresi and A Douglas Melamed show how it can be used to integrate tort and property. Professor Robert Cooter uses the model to provide a unified analysis of tort and contract. A central result of the model is that the standard for negligence provides incentives for individuals to take socially optimal actions …

Janet M Currie and W Bentley MacLeod, ‘Savage Tables and Tort Law: An Alternative to the Precaution Model’. University of Chicago Law Review, Vol 81, 53 (2014).

First posted 2014-04-17 12:39:33