Hindsight Bias and Tort Liability: Avoiding Premature Conclusions

Abstract:     
In negligence actions, defendants are supposed to be judged by the reasonableness of their conduct at the time that they acted. However, the findings of cognitive psychology warn us that jurors who know the outcome will find it very difficult to assume a foresight perspective. Individuals who know that a bad outcome has occurred tend to evaluate prior conduct more harshly than they would if they were unaware of the actual outcome.

In the decade since the pro-plaintiff implications of this research data have been understood, several proposals have been made for minimizing the impact of the hindsight bias on jury verdicts. The most dramatic include (1) replacing the tort standard of reasonable care with a standard of care that is established ex ante, such as compliance with reliable customary norms; (2) replacement of the traditional tort standard of reasonable care with a good faith standard of care similar to the "business judgment rule" used in corporate law; (3) imposition of a clear and convincing burden of proof on plaintiffs; (4) broader reliance on prospective administrative safety regulation.

This Article contends that lawmakers should respond cautiously to these recommendations for reform. There are three important reasons for resisting the temptation to adopt reforms that, while elegant in theory, are likely to significantly favor tort defendants.

First, the judicial process as a whole and the fact-finding process in particular are each complex processes that favor plaintiffs in some respects and defendants in others. Several attributes of the judicial process already favor tort defendants. For example, many jurors distrust the motives of plaintiffs, few negligently injured persons file suit and some cognitive biases favor defendants. Those advantages may already offset any benefit conferred on plaintiffs by the hindsight biases. In addition, the General Theory of the Second Best reminds us that fixing some imperfections while tolerating others can actually make a situation worse, rather than better.

Second, there are good reasons to doubt that jurors are as vulnerable to the hindsight biases as study subjects. Actual jury trials have higher stakes, more robust facts, individual accountability, and group deliberations. In addition, judges and defense counsel can help to reduce the impact of the hindsight biases by encouraging the jurors to consider alternative causal pathways.

Third, a number of relatively even-handed debiasing reforms can and should be tested before resorting to defense-oriented reforms like deference to custom or administrative preemption. These strategies include bifurcating the trial of liability and damages, re-instituting unanimous verdicts and permitting jurors to take notes and ask questions. In addition, modest changes in judicial communication with jurors could possibly reduce the biases further, including steps such as reminding the jury early and often about the burden of proof, explaining the hindsight bias, and admonishing jurors to discuss the facts before voting. Lawmakers should test these options before thinking seriously about more dramatic reforms that could significantly favor defendants, such as altering the standard of care or making greater use of regulatory preemption.

JEL Classifications: K13

Accepted Paper Series