The Limits of Formal Economics in Tort Law: The Puzzle of Negligence

Abstract

This Article challenges the leading formal economic analysis of negligence rules in tort law. That analysis, which is meant both (1) to justify negligence rules over no-liability and strict-liability rules on theoretical grounds and (2) to provide a framework for understanding whether victims or injurers should bear the costs of an accident when both parties are innocent and have behaved carefully, is widely accepted by leading law-and-economics scholars, but its applicability is limited in several important respects.

Indeed, despite the common wisdom that tort law represents a triumph for the deductive economic analysis of law, tort law has resisted explanation through simple economic models. This does not mean economic reasoning is irrelevant to tort law, but it means that commentators should be cautious in accepting formal deductions about tort law. The purpose of this Article is to illuminate the limits of economic reasoning as a principled basis for tort law.

Keywords: tort, negligence, law and economics, injurer, victim, bilateral precaution, activity levels

JEL Classification: K13