2013 Articles

Savage Tables and Tort Law: An Alternative to the Precaution Model

Currie, Janet M.; MacLeod, W. Bentley

In this paper we show that the model of precaution is a special case of a more general economic model. We develop a simple technique for discussing this more general model that we dub a “Savage Table,” following Professor Leonard Savage. Our more general model based on general equilibrium theory and decision theory encompasses the views of both Posner and Epstein and sheds light on Epstein's observation that the Hand rule is not consistently used to determine liability. We show that rational choice does not imply the Hand rule unless one imposes additional restrictions that are not often satisfied in practice.