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Regulating In Foresight Versus Judging Liability In Hindsight: The Case Of Tobacco, Jeffrey J. Rachlinski
Regulating In Foresight Versus Judging Liability In Hindsight: The Case Of Tobacco, Jeffrey J. Rachlinski
Jeffrey J. Rachlinski
Potentially dangerous products, such as cigarettes, can be regulated through ex post liability or ex ante regulation. Both systems should reach the same result. In practice, however, cognitive biases that influence the liability system can produce incentives to take an excess of precautions. In particular, because people tend to see past events as more predictable than they really were, judges and juries will tend to find defendants who took reasonable care negligent or even reckless. As a consequence of these biases, a liability system can be more expensive than a regulatory system, both to potential defendants and to society. Cognitive …
Product-Related Risk And Cognitive Biases: The Shortcomings Of Enterprise Liability, James A. Henderson Jr., Jeffrey J. Rachlinski
Product-Related Risk And Cognitive Biases: The Shortcomings Of Enterprise Liability, James A. Henderson Jr., Jeffrey J. Rachlinski
Jeffrey J. Rachlinski
Products liability law has witnessed a long debate over whether manufacturers should be held strictly liable for the injuries that products cause. Recently, some have argued that psychological research on human judgment supports adopting a regime of strict enterprise liability for injuries caused by product design. These new proponents of enterprise liability argue that the current system, in which manufacturer liability for product design turns on the manufacturer's negligence, allows manufacturers to induce consumers into undertaking inefficiently dangerous levels or types of consumption. In this paper we argue that the new proponents of enterprise liability have: (1) not provided any …
Ex Post ≠ Ex Ante: Determining Liability In Hindsight, Kim A. Kamin, Jeffrey J. Rachlinski
Ex Post ≠ Ex Ante: Determining Liability In Hindsight, Kim A. Kamin, Jeffrey J. Rachlinski
Jeffrey J. Rachlinski
Participants in three conditions (foresight, hindsight, and a modified hindsight condition designed to ameliorate the hindsight effect) assessed whether a municipality should take, or have taken, precautions to protect a riparian property owner from flood damage. In the foresight condition, participants reviewed evidence in the context of an administrative hearing. Hindsight participants reviewed parallel materials in the context of a trial. Three quarters of the participants in foresight concluded that a flood was too unlikely to justify further precautions—a decision that a majority of the participants in hindsight found to be negligent. Participants in hindsight also gave higher estimates for …