Computational Complexity and Tort Deterrence

42 Pages Posted: 14 Nov 2019 Last revised: 28 May 2021

Date Written: May 25, 2021

Abstract

Standard formulations of the economic model of tort deterrence constitute the injurer as the unboundedly rational bad man. Unbounded rationality implies that the injurer can always compute the solution to his care-taking problem. This in turn implies that optimal liability rules can provide robust deterrence, for they can always induce the injurer to take socially optimal care. In this paper I examine the computational complexity of the injurer's care-taking problem. I show that the injurer's problem is computationally tractable when the precaution set is unidimensional or convex, but that it is computationally intractable when the precaution set is multidimensional and discrete. One implication is that the standard assumptions of unidimensional and convex care, though seemingly innocuous, are pivotal to ensuring that tort law can provide robust deterrence. It is therefore important to recognize situations with multidimensional discrete care, where robust tort deterrence may not be possible.

Keywords: computational complexity, NP-hard, negligence, strict liability, supermodularity, tort law

JEL Classification: C61, K13

Suggested Citation

Teitelbaum, Joshua C., Computational Complexity and Tort Deterrence (May 25, 2021). Available at SSRN: https://ssrn.com/abstract=3480709 or http://dx.doi.org/10.2139/ssrn.3480709

Joshua C. Teitelbaum (Contact Author)

Georgetown University Law Center ( email )

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Washington, DC 20001
United States
202-661-6589 (Phone)

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