Question

law and economics questions

1)what is capital Punishment, optimal deterrence, and marginal deterrence and provide examples for each

2)what is Negligence legal definition, and its application under Learned Hand’s “Hand Rule” provide an example

Answer 1

Answer 1 -

Capital punishment, also known as the death penalty, is a government-sanctioned practice whereby a person is put to death by the state as a punishment for a crime. Crimes that are punishable by death are known as capital crimes or capital offences, and they commonly include offences such as murder, treason, espionage, war crimes, crimes against humanity and genocide.

The theory of optimal deterrence in antitrust law enforcement has become nearly universally accepted in the legal-economic literature since a classic article by Landes (1983). Socially optimal deterrence occurs at the point where the marginal social cost of reducing crime further equals the marginal social benefit. For example, an accountant who devotes herself to embezzling funds has less time for legitimate bookkeeping. Furthermore, while in prison, an accountant cannot audit books for clients. The opportunity cost of crime among accountants may be large enough to affect the optimal deterrence of embezzlement.

The term “marginal deterrence” seems to be due to Stigler (1970), but the notion has been well known from the time of some of the earliest writing on sanctions. See Beccaria (1770, 32), Montesquieu (1748, Book VI, Ch. 16, 161-62), and Bentham (1789, 171). Bentham, for example, states (citing an essentially identical passage of Montesquieu) that an object of punishment is “to induce a man to choose always the least mischievous of two offenses; therefore where two offenses come in competition, the punishment for the greater offense must be sufficient to induce a man to prefer the less.”

Answer 2 -

Negligence legal definition - A failure to behave with the level of care that someone of ordinary prudence would have exercised under the same circumstances. The behavior usually consists of actions, but can also consist of omissions when there is some duty to act (e.g., a duty to help victims of one's previous conduct)

The Hand Rule describes a process for determining whether a duty of care has been breached. It originates from judge Learned Hand’s opinion in the famous court case United States v. Carroll Towing Co.

The rule is as follows:

“The owner’s duty, as in other similar situations, to provide against resulting injuries is a function of three variables: 1) the probability that the barge will break away (P), 2) the gravity of the resulting injury (L) and 3) the burden of adequate precautions (B).”

This gives us the following equation: B < PL.

An act is in breach of the duty of care if the cost of precautions is exceeded by the probability and gravity of the loss.

This equation has three consequences:

First, it means P x L must be > B to create a duty of care for the defendant.

Second, it means if B > PL, an individual will allow harm to occur and pay for the costs of the harm afflicted, because it will be more cost-efficient than taking precautions.

Third, it means If B < PL , an individual should take precautions, rather than risking the harm to occur. If he doesn’t take precautions, the duty of care has been breached and liability is imposed on that person to pay for the afflicted harm.

Understanding and applying this equation should lead to an optimal allocation of resources: where harm can be avoided cheaply, the legal system requires precautions, when precautions are too expensive, it does not.