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The Hand Rule and United States v. Carroll Towing Co. Reconsidered

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  • Allan M. Feldman
  • Jeonghyun Kim

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. Copyright 2005, Oxford University Press.

Suggested Citation

  • Allan M. Feldman & Jeonghyun Kim, 2005. "The Hand Rule and United States v. Carroll Towing Co. Reconsidered," American Law and Economics Review, American Law and Economics Association, vol. 7(2), pages 523-543.
    • Handle: RePEc:oup:amlawe:v:7:y:2005:i:2:p:523-543
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    File URL: http://hdl.handle.net/10.1093/aler/ahi017
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    Citations

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    Cited by:

    1. Allan M. Feldman & Ram Singh, 2009. "Comparative Vigilance," American Law and Economics Review, American Law and Economics Association, vol. 11(1), pages 134-161.
    2. Ashlagi, Itai & Karagözoğlu, Emin & Klaus, Bettina, 2012. "A non-cooperative support for equal division in estate division problems," Mathematical Social Sciences, Elsevier, vol. 63(3), pages 228-233.
    3. Elisabeth Paté‐Cornell & Louis Anthony Cox, 2014. "Improving Risk Management: From Lame Excuses to Principled Practice," Risk Analysis, John Wiley & Sons, vol. 34(7), pages 1228-1239, July.
    4. Allan M Feldman & Ram Singh, 2008. "Comparative Vigilance: a Simple Guide," Working Papers 2008-11, Brown University, Department of Economics.
    5. Allan M. Feldman & Ram Singh, 2009. "Comparative Vigilance," American Law and Economics Review, Oxford University Press, vol. 11(1), pages 134-161.
    6. Kim, Jeonghyun & Feldman, Allan M., 2006. "Victim or injurer, small car or SUV: Tort liability rules under role-type uncertainty," International Review of Law and Economics, Elsevier, vol. 26(4), pages 455-477, December.
    7. Grady Mark F., 2009. "Unavoidable Accident," Review of Law & Economics, De Gruyter, vol. 5(1), pages 177-231, April.

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