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Computational Complexity And Tort Deterrence, Joshua C. Teitelbaum

Georgetown Law Faculty Publications and Other Works

Standard formulations of the economic model of tort deterrence constitute the injurer as the unboundedly rational bad man. Unbounded rationality implies that the injurer can always compute the solution to his care-taking problem. This in turn implies that optimal liability rules can provide robust deterrence, for they can always induce the injurer to take socially optimal care. In this paper I examine the computational complexity of the injurer's care-taking problem. I show that the injurer's problem is computationally tractable when the precaution set is unidimensional or convex, but that it is computationally intractable when the precaution set is multidimensional and …