ECO320Y5 Lecture Notes - Lecture 12: Factory Acts, Convenience Store, Ginger Ale
Document Summary
Lecture 12 - economic analysis of tort law. Overlaps with liability case pollution, damaged property. Legal terms that covers non-contractual injuries/remedies areas out of contract. 50 50 chance of an accident. When faced with a random chance accident, a risk adverse decider prefers the expected value of his or her wealth over its random distribution. The legal system took a long time to understand difference random events and events people could control: have always tried to keep this separate. Risk averse we will air the side of caution prepare to pay a cost: you could be risk averse and be rational at the same time but not the same thing, different strategic ideas. Income here is treated as a composite good. The utility generated by the expected value of the wealth of the risk averse decider is larger than the expected utility generated by the randomness of that wealth.
