Factual Uncertainty and Risk-Utility Analysis

Abstract

This ten-page essay explores the dilemma that tort law's risk-utility analysis poses for people who have incomplete information about anticipated risks and benefits. When actors have incomplete information, their reasonable risk-utility estimates are likely to vary considerably.

One possible implication of this range of reasonable risk-utility calculations is that each calculation with the range is equally defensible. To the extent that culpability is defined using risk-utility analysis, the notion of a range of reasonable choices, therefore, would soften the demands of negligence law by treating a wider range of decisions about accident avoidance as reasonable.

It is equally possible, however, that juries will limit the actor's freedom to choose within this range of uncertainty. They may feel that a defendant facing factual uncertainty should err in favor of safety. If so, juries could insist (and may already insist) that commercial actors invest at the upper end of the range. In that event, the obligation to take precautions in the face of factual uncertainty may yield a more robust obligation to take precautions than would have existed if the true risks and utilities had been known ex ante.

The crucial normative question, of course, is whether juries should be allowed to limit the range of otherwise reasonable choices in this manner. On this issue, scholars and courts are likely to disagree. However, the debate cannot begin until we recognize and acknowledge the important implications of ex ante factual uncertainty. Prompting that recognition is the purpose of this essay.

Keywords: tort, risk-utility