Abstract
Skeptics of rational choice theory have long predicted that behavioral economics would radically transform the legislation, adjudication, and analysis of law. Using tort law as an exemplar, this Article maps out the narrow set of conditions where substantive law can be modified to accommodate irrational decision-makers. Specifically, this Article demonstrates that if injurers are systematically biased, and the due care standard can be expressed quantitatively, and victims are unable to take meaningful precautions, then imposing punitive damages can induce irrational injurers to exercise efficient precautionary care. In all other cases, it is better that the law adopt a presumption of rationality, regardless whether individuals behave rationally in fact.
Department
Law
Subject
Torts--Law and Economics
Publication Date
11-17-2021
Journal Title
Review of Law and Economics
Publisher
De Gruyter Brill
Digital Object Identifier (DOI)
https://doi.org/10.1515/rle-2021-0076
Document Type
Article
Recommended Citation
Daniel Pi, The Limits of Behavioral Economics in Tort Law, 17 Rev. L. & Econ. 323 (2021).
Included in
Law and Economics Commons, Legal Remedies Commons, Torts Commons