Torts - Cases, Principles, and Institutions Fifth Edition, 2016a

Witt & Tani, TCPI 4. Negligence Standard
Table 1: The Negligence Analysis
Burden of the
precaution (B)
Scenario 1:
Expensive
Precaution
Scenario 2:
Inexpensive
Precaution
Probability of
harm absent the
precaution (P)
Expected
damages in the
event harm
occurs (L)
15 10% 100 Not negligent
5 10% 100 Negligent
3. The ex ante view. So far we’ve given consideration to what we might think of as the ex
post application of the Hand test. We have asked how someone in the position of a judge or jury
would operationalize it with respect to precautions not taken. But the deeper significance of the
Learned Hand test may be its ex ante implications. Parties knowing that in the event of an injury
they will be held liable for having failed to take certain precautions that were cost justified should
begin to take those precautions. Consider the cricket club: under a negligence regime, will they
build a higher wall at the beginning of the year? In scenario 2, assuming that they have a lawyer
who is worth her socks, they sure will. In scenario 1, on the other hand, they will not. Note that it
is very likely that in the actual world the cricket team will get decent advice on such a question.
They almost certainly will have a liability insurance policy. And if they do, the liability insurer
will have every incentive to inspect the field and require the team (on pain of a higher liability
insurance premium) to raise the fence.
We can see this in Table 2, which is a variation on the two scenario set-up in Table 1.
Here we include a fourth column that adds the ex ante decision that the negligence regime
incentivizes. You can see that where the precaution costs more than it is worth, the rational actor
will not build. But where the precaution is less costly than the expected cost of the injuries that
will take place absent the precaution, the rational actor will build.
Table 2: To Build or Not to Build (under a Negligence Regime)
(B) (P) (L) Court
Determination in
event of injury
Ex ante view:
Build the
Higher Fence?
Scenario 1 15 10% 100 Not negligent—D
doesn’t pay
Scenario 2 5 10% 100 Negligent—D
pays
Not build
Yes build
4. Strict liability in the ex ante view. At this point in the analysis something striking
emerges. Let’s take the same scenarios as above but compare the incentives to take precautions
under a Learned Hand-style negligence regime with the incentives to take precautions under a
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