Probabilistic Disclosures for Corporate and Other Law

20 Pages Posted: 29 Aug 2019 Last revised: 29 Jan 2021

See all articles by Saul Levmore

Saul Levmore

University of Chicago Law School

Date Written: January 29, 2021


This Article explores the costs and benefits of one subset of continuous and
discontinuous rules. These expressions are shown to be distinct from the familiar
dichotomy expressed as standards versus rules, but they share the difficulty of
dividing the world of law in two. Still, regulatory approaches that focus on
discontinuities can often be made more continuous, and vice versa. A speed limit
is discontinuous in the sense that one drives above or below (or within) the
announced limit. But it is often made more continuous – even with more
discontinuities – as when the stated limit is different for various kinds of vehicles.
This Article works around these definitional problems to show that law often
discourages useful disclosures by encouraging parties with information to offer
continuous information in order to avoid after-the-fact lawsuits when specific
disclosures prove to have inaccuracies. For example, it is common to hear or be
warned that a medical procedure poses the risk of death, when the better-informed
doctor or hospital could have given the precise percentages attached to various
outcomes. Similarly, a corporation is on safe ground when it follows “generally
accepted accounting principles,” when investors would have learned more from
information about good and bad outcomes put in probabilistic terms. The Article
works toward the suggestion that law might create a safe harbor in which
probabilistic disclosures are protected when they are, or are certified to be, more
useful than the ready alternative of fairly general disclosures.

Keywords: Corporate Law, Disclosure, Fiduciary Duty, Shareholders, Stakeholders, Information Sharing

JEL Classification: K2, K22

Suggested Citation

Levmore, Saul, Probabilistic Disclosures for Corporate and Other Law (January 29, 2021). University of Chicago Coase-Sandor Institute for Law & Economics Research Paper No. 884, Available at SSRN: or

Saul Levmore (Contact Author)

University of Chicago Law School ( email )

1111 E. 60th St.
Chicago, IL 60637
United States
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773-702-0730 (Fax)

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