The Calculus of Risk outline, 93004

1
The Calculus of Risk (outline,
9/30/04)

• What contributes to assessing reasonable care?
• Blyth v. Birmingham Water Works
• Eckert v. L.I.R.R.
• Cooley v. Public Service Co.
• Alternative standards
• Osborne v. Montgomery
• Andrews v. United Airlines (next week)

2
Factors in reasonable care

• Expected value of the harm to be prevented
• Probability of harm (risk) (Blyth Alderson)
• Magnitude of harm (hazard)
• Expected value/cost of the preventive measure.
• Cost of prevention (magnitude)
• Includes information cost (Blyth Bramwell)
• Value of the preventive measure
• Probability (likelihood of success)
• Magnitude (Terrys collateral object)
• Alternative risks imposed by prevention (Cooley)
  (probability hazard)

3
Factors in reasonable care

• Expected value of the harm to be prevented
• Probability of harm (risk) (Blyth Alderson)
• Magnitude of harm (hazard)
• Expected value/cost of the preventive measure.
• Cost of prevention (magnitude)
• Includes information cost (Blyth Bramwell)
• Value of the preventive measure
• Probability (likelihood of success)
• Magnitude (Terrys collateral object)
• Alternative risks imposed by prevention (Cooley)
  (probability hazard)

4
Factors in reasonable care

• Expected value of the harm to be prevented
• Probability of harm (risk) (Blyth Alderson)
• Magnitude of harm (hazard)
• Expected value/cost of the preventive measure.
• Cost of prevention (magnitude)
• Includes information cost (Blyth Bramwell)
• Value of the preventive measure
• Probability (likelihood of success)
• Magnitude (Terrys collateral object)
• Alternative risks imposed by prevention (Cooley)
  (probability hazard)

5
Factors in reasonable care

• Expected value of the harm to be prevented
• Probability of harm (risk) (Blyth Alderson)
• Magnitude of harm (hazard)
• Expected value/cost of the preventive measure.
• Cost of prevention (magnitude)
• Includes information cost (Blyth Bramwell)
• Value of the preventive measure
• Probability (likelihood of success)
• Magnitude (Terrys collateral object)
• Alternative risks imposed by prevention (Cooley)
  (probability hazard)

6
Factors in reasonable care

• Expected value of the harm to be prevented
• Probability of harm (risk) (Blyth Alderson)
• Magnitude of harm (hazard)
• Expected value/cost of the preventive measure.
• Cost of prevention (magnitude)
• Includes information cost (Blyth Bramwell)
• Value of the preventive measure
• Probability (likelihood of success)
• Magnitude (Terrys collateral object)
• Alternative risks imposed by prevention (Cooley)
  (probability hazard)

7
Factors in reasonable care (review, 9/30/04)

• Expected value of the harm to be prevented
• Probability of harm without prevention (risk)
  (Blyth Alderson)
• Magnitude of harm (hazard)
• Expected value/cost of the preventive measure.
• Cost of prevention (magnitude)
• Includes information cost (Blyth Bramwell)
• Value of the preventive measure
• Probability (likelihood of success)
• Magnitude (Terrys collateral object)
• Alternative risks imposed by prevention (Cooley)
  (probability magnitude)

8
The Calculus of Risk, II (outline,
10/5/04)

• Alternative standards for reasonable care
• Osborne v. Montgomery
• Andrews v. United Airlines
• The Learned Hand test
• Carroll Towing and BPL

9
Osborne v. Montgomery jury instruction (Supp.
V-27)

• Every person is negligent when, without intending
  to do any wrong, he does such an act, or omits to
  take such a precaution that, under the
  circumstances present, he ought reasonably to
  foresee that some injury or damage might probably
  result from his conduct. He is in duty bound to
  foresee all such natural consequences of his
  conduct as an ordinarily prudent and intelligent
  person would ordinarily foresee under the then
  present circumstances.

10
Andrews v. United Airlines (p. 197)

• Utmost care
• All that human care, vigilance, and foresight
  reasonable can do.
• Defendant must prevent even a small risk of
  serious injury . . . If that risk could be
  eliminated consistent with the character and
  mode of airline travel and the practical
  operation of that business.

11
Judge Learned Hand
12
The Learned Hand Test

• Precautions are required if and only if
• B lt pL
• Burden lt (probability of injury) (gravity of
  injury)
• Cost of prevention lt injury risk injury hazard

13
Application of BPL test

• Cost of precaution (B) 100
• Risk of loss, absent precaution (p) .25
• Magnitude of loss, if it occurs (L) 1000.
• Is B lt pL?
• Is 100 lt .251000 ?
• Yes 100 lt 250
• So the precaution IS required.

14
Carroll Towing and Custom

• If the issue were whether the bargee should have
  been aboard at night, that might be different
• It may be that the custom is otherwise, . . .
  and that, if so, the situation is one where
  custom should control. (p. 190).

15
Carroll Towing under legal regimes

• Facts Same as in Carroll Towing, but simplify
  make the barge the deft. To prevent the accident
  (by stationing a bargee on board) would cost the
  barge 100. Likelihood of harm without that
  precaution is 25. If harm occurs, it will cost
  1000. What does the barge owner do? What would
  the barge owner do if the precaution cost 400?
• Without tort law?
• With tort law
• (a) Under the Hand formula?
• (b) If tort law goes by custom?
• (c) Under strict liability?
• (d) Under Andrews standard

16
Liability and precautions (review 10/5/04) (a)
Liability finding against deft?(b) Will deft.
take the precaution?
least strict most strict
i ii iii iv v
17
Liability and precautions (review 10/5/04)
i ii iii iv v
(least strict) (most strict)
18
Liability and precautions (review 10/5/04)
Efficient conduct by injurers
i ii iii iv v
(least strict) (most strict)
19
Challenges to efficiency (class outline 10/7/04)

• Within utilitarianism
• Unreality sources of inefficient failures to
  take precautions, inefficient over-precautions
• Declining marginal utility of money
• Alternatives to utilitarianism
• The Kantian objection to the one-owner principle
  (herein of rights and baselines)
• The goal of distributional justice
• The incommensurability of life and moneymoney
• Custom Another goldilocks story (Titus, Mayhew,
  T.J. Hooper)

20
Challenges to efficiency (review of 10/7/04)

• Within utilitarianism
• Unreality sources of inefficient failures to
  take precautions, inefficient over-precautions
• Declining marginal utility of money
• Alternatives to utilitarianism
• The Kantian objection to the one-owner principle
  (herein of rights and baselines)
• The goal of distributional justice
• The incommensurability of life and money