Tort Liability and Unawareness

Abstract

Unawareness is a form of bounded rationality where a person fails to conceive all feasible acts or consequences or to perceive as feasible all conceivable act-consequence links. We study the implications of unawareness for tort law, where relevant examples include the discovery of a new product or technology (new act), of a new disease or injury (new consequence), or that a product can cause an injury (new link). We argue that negligence has an important advantage over strict liability in a world with unawareness-negligence, through the stipulation of due care standards, spreads awareness about the updated probability of harm.

Reverse Bayesianism and act independence

“…An injurer may cause harm to a victim because her actions have consequences of which she was previously unaware. We study this problem in Chakravarty et al (2019). We…”

Computational Complexity and Tort Deterrence

“…In their early paper on strict liability, for instance, Guido Calabresi and Jon Hirscho¤ argue that the choice among tort liability rules should depend not on the theoretical ability of injurers and victims to optimize, but rather on their actual abilities taking into account the "psychological or other impediments" to optimizing (Calabresi andHirscho¤ 1972, p. 1059; see also Faure 2008). 4 Subsequently, legal economists have studied the implications for tort law of various aspects of bounded rationality, including ambiguity (Teitelbaum 2007;Chakravarty and Kelsey 2017;Franzoni 2017) and unawareness (Chakravarty, Kelsey, and Teitelbaum 2019). As far as I am aware, however, no other paper in the literature has studied the implications of computational complexity for tort law.…”

“…See alsoOtt and Schäfer (1997),Feess and Wohlschlegel (2006),and Chakravarty, Kelsey, and Teitelbaum (2019).…”