In this earlier post, I mentioned how even one occurrence of an unlikely event, leads to action, no matter how rational or irrational. Michael, commenting on the post, mentions an example I had been thinking about as well, the tragedy of the girl killed by a puck at a hockey game and how that led to nets at the ends of the stadium to protect customers from a one in a million risk.
I wonder how much of this response is due to the threat of a law suit. Once something has happened, no matter how unlikely, the second time is considered negligence. So the first time someone is killed by a hockey puck, it’s bad luck. But the second time, no matter how unlikely, you get sued for not having nets up to block the puck. So maybe it’s not ‘salience’ but the legal environment that explains seemingly irrational overreaction to remote risks.
Podcast RSS Feed
Full EconTalk Text
{ 21 comments }
Professor Roberts,
With due respect, I must disagree. In torts class, one of the first things we law students learn is the Learned Hand formula: B
So yes, it is the legal environment that leads to such precautions. But is it "irrational"? Ask the people (however few there are) that are alive today because of nets in hockey arenas. (I realize this is impossible, but I'm trying to make a point.)
It could also be that the team/owner/arena have chosen to take a simple measure to reassure their customers about safety to keep them coming/paying.
The rationality/irrationality is perhaps a moot point. As a product or service vendor you don't "win" many arguments with your customers. So if the customers feel safer (whether they are statistically or not and whether this feeling is rational or not) due to the nets, then the arena puts the nets up.
Not sure what happened there, but the first paragraph was supposed to read: One of the first things we law students learn is the Learned Hand formula: B
I apologize. Apparently typepad doesn't like the "less than" sign. Here's my analysis and the Hand formula again:
B(less than)pL. If the burden of preventing harm(B) is less than the probability of harm(p) times the degree of loss(L), then an actor is negligent. In this case, the burden of buying and installing nets is probably very low. The probability of harm is also low, but the loss is death. Thus, it is likely that the small burden of installing nets is outweighed by the benefits (fewer death/injuries).
If the courts get the level of damages right, then the team owner will act efficiently if he is held liable whenever a fan is killed by a puck. In this case a risk neutral owner will only install nets if the cost of the nets is lower than the expected harm caused by him not putting up nets.
CT…most blogs won't like the 'less than' sign, because it's used in HTML code to execute text commands, like how you make something italic or bold. You put an 'i' or a 'b' in between less than and greater than signs (why the heck can't I remember what they're called??) on each side of the text, (along with a forward slash on the back side of the text, to tell it to 'end italics' or 'end bold').
james…as well as the social costs (and possible revenue costs) he'd incur if he's a holdout. If the rangers put up nets, and the Nets don't put up nets, ny area fans might call the nets owners selfish and greedy (etc., etc.), and they'd have a social cost to pay, as well as possibly losing revenue from all the soccer moms who won't let their husbands take their kids to see a game "because those pucks are just flying into the stands left and right!!" (ya gotta say it with a NJ accent for the full effect).
I must disagree with you on one issue: A single first-time event, no matter how unpredictable, is not immune to a law suit in this day and age. Not when auto companies have been successfully sued for not employing technologies in their cars that did not even exist at the time of the accident.
Coyote, you are correct. The legal standard is first whether you were aware of such risk, and second whether you should have been aware of a risk. If it was reasonably foreseeable that a girl would die from an errant hockey puck, you will probably be held liable for not taking reasonable precautions, given the state of current technology.
To what auto industry case are you referring to, btw? Courts generally hold actors to a standard of reasonableness given the state of scientific knowledge and technology. I'd be surprised if a court found liability when it was technologically impossible to prevent a given risk of harm.
Legal standards aside, I don't think the question is one of probability and costs. To me, the question is more along the lines of who should make the decision. Everyone who goes to a baseball or hockey game knows there is a slim chance they may be hit by a ball or puck.
Shouldn't it be the customers of the ball field or hockey arena who decide whether or not they want safety measures installed? They may view the net as interfering with their viewing of the game, and would rather take the slim chance of getting injured. If not, they may ask the stadium owners to install a net, or instead decide to sit some place safer. If many customers wish nets installed, its likely they will be installed.
To base such a decision on the threat of a lawsuit seems like a problem originating from the legal system to me. This isn't a case of serious asymmetrical information, where the customer is unaware of the risk.
I think what Prof. Roberts's post has mainly demonstrated is that a lot of Cafe Hayek readers are law students or lawyers (like me).
Seriously, this post raises a lot of very interesting issues that I hope will be explored in future Cafe posts. E.g., how is a judge-made rule different from a statute? What might the Coase theorem have to say about such situations? If the rule is inefficient, can the market correct it?
Speaking from a risk management perspective, there's three quick things to evaluate when considering events:
- What is the probability?
- What is the intensity?
- What is the cost of prevention / reduction?
For instance, a totally ridiculous but potentially illuminating example would be that if a puck had a 1 in 10 million chance to fly into the crowd and somehow set off a nuclear reaction that would end all life in a ten mile radius nigh-instantaneously, you would see nets up immediately. Would it be ridiculous to do so, even though the probability of the event is tiny?
No.
Expected return is a function of probability and intensity; in the case of an individual in the audience dying, I would suggest putting up nets is a perfectly rational action even without legal considerations.
Even with low probabilities of occurrence, events can be of such high impact that they are worth mitigating because it greatly raises your expected return, on average, to do so.
Why the suggestions here create a boom in the net industry? Particularly in developing totally see-through nets?
Why put up nets at all, just extend plexiglass up around the arena sides so fans are safe and can still see perfectly.
If we have padded dashboards, why not padded pucks….try saying that wid a "joisey" accent?
Why not? Why not? We have no right to self risk, take it away or make others pay!
Utah, 1986, man buys a full size top of the line three wheel Yamaha All Terrian Vehicle. Capable of top speeds well over 50 MPH, weight somewhere over 700Lbs. No roll bars or seat belts or any kind of built in protection for the operator, who sits in the driver's seat exposed to what ever comes.
Takes his family down to the Dunes area in central western Utah, where idiots tear up the country side with their ATVs.
Puts his 6 year old (yes six year old) son up on the driver seat and turns him loose with the machine to go race up, down, and across dunes with slopes exceeding 10 degrees in many places. A six year old with a six year old's judgment on a machine like that.
Six year old rolls the ATV and dies in the roll-over.
Man files suit against Yamaha because they "didn't tell him" that the machine was dangerous and could roll when it was put to angles it could not handle. Wrongful death suit against Yamaha.
Scumbag attorney takes the suit and files in court. Scumbag court accepts the suit instead of throwing attorney, dad, and filings in jail for stupidity.
The justice system in this nation began to turn in the 1960s to allowing deniability by plaintifs of self responsibility and common knowledge. It culminates with the insanity I sit and videotape about four days a week. Insanity like that being discussed in regards with this topic.
You go to a hockey game/baseball game with the sure and certain knowledge that the game is being played with hard objects that can maim or kill. You know full well that the conditions in the arena/field are such that there is a remote possibility that such could come flying your way.
your choices are; 1. don't go to the game. 2. if you go to the game accept that you are doing it voluntarily. 3. if you buy the ticket, buy one in an area that reduces the remote possibility to infinite possibility.
4. if you buy tickets in a risk area accept that it was your choice. 5. if harm comes don't whine, you did it to yourself……….and last but not least 6. ignore all of that and deny everything connected to self responsibility and common knowledge and head straight for a lawyers office and sue sue sue sue!
And the winner among choices is…………..yesssss…….number 6!
In a sense the market will offer more and more safety as the demand grows. Scaredycats will enjoy the consumer surplus while daredevils will complain about the side-effects of safety, but overall shouldn't we be saying that we are getting just the right amount of safety? The problem arises if the safety is imposed from above, by decisions reached through a blunt majority rule among few decision-makers. What Russ seems to be saying is that even when changes happen spontaneously they might still have been influenced by the law in an indirect way. So who's fault is it? Some people blame the lawyers, others blame the judges, yet others blame the law itself. But one could go a step further and blame the process that produces the law. Is this process optimal?
First year law students must be learning a lot of things that weren't in vogue when I went to law school back in the 19th Century, or so it seems that long ago. I remember several cases involving injuries sustained by errant hockey pucks and most of them ended with rulings by such wise judges as Benjamin Cardozo holding that one may not sue for injuries that result from the inherent risks of either participating in or being a spectator of a sporting activity.
Well, I guess that was before America became a nation of victims.
God bless you Flash Gordon for saying it so clearly and succinctly. Amen!
Well Flash Gordon, I did read a few Cardozo opinions on assumption of risk, and you're right that it does apply in many circumstances still. For example, the hockey players themselves take on the normal risks inherent in playing hockey, and will not be able to sue anybody for their injuries. But why is such a minimal precaution as a (mostly) transparent net, which costs the arena doodly-squat to install, such a big deal when, as Austin Campbell pointed out, the potential impact is death? Benefits outweigh the costs for me.
Think of it this way: if your spouse died at a hockey game, and you knew that a simple net above the rink end would have prevented it, wouldn't you think the arena should have taken such a minimal precaution? Now maybe you and vidyohs wouldn't run to a lawyer, but I'm sure you would resent the hockey arena owners for the rest of your life.
I understand the aversion to runaway tort liability, my dad being a doctor and all, but this just doesn't seem like the case to get your panties in a bunch, so to speak.
CT,
My friend, anything that involves the reduction of choice and freedom is a HUGE reason to get your panties in a bunch!
There is no safe or sane doseage of Arsenic that can be taken time after time, the cumlative affect is death.
vidyohs,
I'm with you on the reduction of freedom point. But tort law is about making people pay for costs they have imposed on others, something libertarians shouldn't really be against. Hasn't Richard Epstein (and others) made the case for a tort law system of land use controls? Doesn't David Friedman even argue for basic, privately enforced tort liability? If you're not against tort law in general, I fail to see how the nets example is the one that has most gotten under your skin, given many, many other more egregious successful claims. Your own example (the dune buggy) and product liability claims in general seem much more offensive to me, mostly because it's almost always user error in those cases. Anyone care to elaborate on what is so irksome about potentially life saving, cheap nets? Or is it just that courts will likely hold the arena liable for errant hockey puck injuries that is so bothersome?
Ouch! How old school are Flash Gordon and vidyohs? Their views remind me of the workplace health and safety of yore – 'you take the job, you take the risks of the job'. Well I s'pose if you cross the road you likewise take the risk of what happens after you step off the kerb. If I were to run over one of your nearest vidyohs – would you be a dear and just put it down as part and parcel of life? And not try to sue me or hunt me down as I was simply getting from A to B and it's not my fault if a youngun got in my way? I'm sure in Libertopia the l'il squirt should've heard my vile pumping stereo a mile away and should've acted accordingly?
I have to comment on your last post about the subject as it was so informative. You really know what you are talking about and can explain things really well. I have only read posts by one other guy who writes as well as you do.