Computational Complexity and Tort Deterrence

Standard formulations of the economic model tort deterrence constitute injurer as unboundedly rational bad man. Unbounded rationality implies that can always compute solution to his caretaking problem. This in turn optimal liability rules provide robust deterrence, for they induce take socially care. In this paper I examine computational complexity injurer’s show problem is computationally tractable when precaution set unidimensional or convex but it intractable multidimensional and discrete. One implication standard assumptions care, though seemingly innocuous, are pivotal ensuring law deterrence. It therefore important recognize situations with discrete where may not be possible.