Table of Contents

Research Handbook on the Economics of Torts

Research Handbook on the Economics of Torts

Research Handbooks in Law and Economics series

Edited by Jennifer H. Arlen

This pioneering Handbook contains specially-commissioned chapters on tort law from leading experts in the field. This volume evaluates issues of vital importance to those seeking to understand and reform the tort law and the litigation process, taking a multi-disciplinary approach, including theoretical economic analysis, empirical analysis, socio-economic analysis, and behavioral analysis. Topics discussed include products liability, medical malpractice, causation, proximate cause, joint and several liability, class actions, mass torts, vicarious liability, settlement, damage rules, juries, tort reform, and potential alternatives to the tort system. Scholars, students, legal practitioners, regulators, and judges with an interest in tort law, litigation, damages, and reform will find this seminal Handbook an invaluable addition to their libraries.


Jennifer Arlen

Subjects: economics and finance, law and economics, law - academic, law and economics, law of obligations


The “new” economic analysis of law began with the economic analysis of torts—with the early analyses focusing on questions such as when does the law need to intervene to internalize externalities (Coase 1960), when should intervention occur through liability rules (Calabresi and Melamed 1972), and what is the optimal structure of liability (e.g.,Shavell 1980a; Landes and Posner 1987). The original economic models of torts tried to provide an economic framework for analyzing accidents that could be applied generally. The resulting simple and elegant models tended to focus on accidents involving one injurer and one victim operating in a world of perfect information, optimal courts, no litigation costs and no insurance. In this world, tort liability is an effective mechanism for inducing optimal investments in care by both injurers and victims when liability is needed to internalize costs, as it is for accidents involving strangers (Calabresi and Melamed 1972; Shavell 1980a; see Landes and Posner 1987) or customers who cannot observe the quality of the goods or services they are purchasing (Spence 1977). Moreover, negligence liability is both effective and low cost. The mere threat of negligence liability is sufficient to induce due care.