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“... or should have known ...”: On Foreseeability and Paradox in Law and Economics


  • Steven Sullivan

    (New York University)


The economic analysis of law, as a subdiscipline of economics, has traditionally been about analyzing the efficiency properties of different rules for assigning known quanta of damages. This work (from the author's NYU doctoral dissertation) focuses on the processes by which agents in legal institutions come to know what they have been assumed to know when the economist models their behavior. This essay suggests that mainstream Law and Economics’ approach to conceptualizing unforeseeable events either contradicts some of its specific conclusions about liability rules or renders it incapable of applying its traditional efficiency criteria to the study of comparative legal systems. An alternative to the efficiency criterion is discussed.

Suggested Citation

  • Steven Sullivan, 2000. "“... or should have known ...”: On Foreseeability and Paradox in Law and Economics," Law and Economics 0004003, University Library of Munich, Germany.
  • Handle: RePEc:wpa:wuwple:0004003
    Note: Type of Document - WordPerfect; prepared on PC-Compatible; to print on Any PC-Compatible (Canon Bubble); pages: 33; figures: None. I invite your comments and suggestions; this paper was the third chapter of my 1998 NYU doctoral dissertation.

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    Posner foreseeability equilibrium strict liability Austrian;

    JEL classification:

    • K - Law and Economics

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