The Hand Rule and <it>United States v. Carroll Towing Co.</it> Reconsidered

Authors: Feldman, Allan M.; Kim, Jeonghyun

Source: American Law and Economics Review, Volume 7, Number 2, 2005 , pp. 523-543(21)

Buy & download fulltext article:

Price: $42.29 plus tax (Refund Policy)

Abstract:

Judge Learned Hand's opinion in United States v. Carroll Towing Co. (1947) is canonized in the law-and-economics literature as the first use of cost-benefit analysis for determining negligence and assigning liability. This article revisits the case in which the Hand formula was born and examines whether Judge Hand's ruling in that case would provide correct incentives for efficient levels of precaution. We argue that the negligence test as used by Judge Hand is somewhat different from the Hand test as used by modern law-and-economics theorists. With a game theoretic analysis of the case, we show that Judge Hand's negligence test could in fact produce games with inefficient equilibria, or with liability determinations opposite Judge Hand's.

Document Type: Research article

DOI: http://dx.doi.org/10.1093/aler/ahi017

Publication date: 2005-01-01

More about this publication?

The rise of the field of law and economics has been extremely rapid over the last 25 years. Among important developments of the 1990s has been the founding of the American Law and Economics Association. The creation and rapid expansion of the ALEA and the creation of parallel associations in Europe, Latin America, and Canada attest to the growing acceptance of the economic perspective on law by judges, practitioners, and policy-makers.