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Rational Legal Decision-Making, Value Judgment and Efficient Precaution in Tort law


    (University of Macau)


    (University of South Australia)

By reinterpreting Savage axioms as axioms of the social rationality over resource allocations, we derive a social welfare function encompassing individual social values and a social attitude towards distributional inequality. Wealth maximization becomes the purpose of law only if individuals have equal social values and the society does not care about distributional inequality. In tort law, when the injurer is less socially valued than the victim, the society imposes a stricter due precaution level, and punitive damages will be awarded. Tort law also implicitly transfers wealth from the less socially valued party to the more socially valued party.

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Paper provided by EconWPA in its series Law and Economics with number 0505004.

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Length: 28 pages
Date of creation: 06 May 2005
Date of revision:
Handle: RePEc:wpa:wuwple:0505004
Note: Type of Document - pdf; pages: 28. forthcoming in JITE
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  1. Philippe Mongin, 2002. "Is there progress in normative economics?," Chapters, in: Is There Progress in Economics?, chapter 10 Edward Elgar.
  2. Mongin, P., . "Consistent Bayesian aggregation," CORE Discussion Papers RP 1176, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  3. Itzhak Gilboa & David Schmeidler, 1992. "Additive Representation of Non-Additive Measures and the Choquet Integral," Discussion Papers 985, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  4. Blackorby, Charles & Donaldson, David & Weymark, John A., 1999. "Harsanyi's social aggregation theorem for state-contingent alternatives1," Journal of Mathematical Economics, Elsevier, vol. 32(3), pages 365-387, November.
  5. Gilboa, Itzhak, 1987. "Expected utility with purely subjective non-additive probabilities," Journal of Mathematical Economics, Elsevier, vol. 16(1), pages 65-88, February.
  6. Louis Kaplow & Steven Shavell, 2001. "Any Non-welfarist Method of Policy Assessment Violates the Pareto Principle," Journal of Political Economy, University of Chicago Press, vol. 109(2), pages 281-286, April.
  7. John C. Harsanyi, 1955. "Cardinal Welfare, Individualistic Ethics, and Interpersonal Comparisons of Utility," Journal of Political Economy, University of Chicago Press, vol. 63, pages 309.
  8. BLACKORBY, Charles & BOSSERT, Walter & DONALDSON, David, 2002. "In Defense of Welfarism," Cahiers de recherche 2002-02, Universite de Montreal, Departement de sciences economiques.
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