Second-Order Decisions

Abstract:     
People are often reluctant to make decisions by calculating the costs and benefits of alternative courses of action in particular cases. Knowing, in addition, that they may err, people and institutions often resort to second-order strategies for reducing the burdens of, and risk of error in, first-order decisions. They make a second order decision when they choose one from among such possible strategies. They adopt rules or presumptions; they create standards; they delegate authority to others; they take small steps; they pick rather than choose. Some of these strategies impose high costs before decision but low costs at the time of ultimate decision; others impose low costs both before and at the time of ultimate decision; still others impose low costs before decision while exporting to others the high costs at the time of decision. We assess these second-order strategies and provide grounds for choosing among them in both legal and nonlegal contexts, by exploring the extent to which they minimize the overall costs of decision and costs of error. We also attempt to cast light on political, legal, and ethical issues raised by second-order decisions.

Number of Pages in PDF File: 49

working papers series