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Precaution: Precaution involves taking anticipatory action to minimize or prevent potential risks or harm in situations with uncertain or incomplete information. See also Risks, Risk perception, Insurances, Planning, Information, Uncertainty, decisions, Decision-making processes, Decision theory.
Annotation: The above characterizations of concepts are neither definitions nor exhausting presentations of problems related to them. Instead, they are intended to give a short introduction to the contributions below. – Lexicon of Arguments.

Author Concept Summary/Quotes Sources

Robert Cooter on Precaution - Dictionary of Arguments

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Precaution/Cooter: Cooter (1985)(1) revealed the power of economic models to provide a unifying framework for law when he used Brown’s accident model - what he called the “model of precaution” - to demonstrate an underlying unity in torts, contracts, and property law. >Negligence law/Miceli
The key insight was Cooter’s recognition that most legal conflicts, regardless of the subject matter, can be conceptualized as “bilateral care” problems in the sense that they involve a dispute between two parties (a plaintiff
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and defendant), each possessing the ability to take some action to avoid or mitigate the resulting “damages.” >Compensation/Cooter.
Contract law: In contract law, for example, Cooter interpreted the breach of a contractual promise as an “accident,” where the “injurer” is the breaching party (the promisor), and the “victim” is the party to whom the promise was made (the promisee). (The fact that the breach is often a deliberate act rather than an “accident” does not alter the mathematical logic of the model.) The promisor’s “care” in this setting is the decision of whether (or when) to breach the contract, and the promisee’s “care” is how much to invest in reliance on performance, which determines the amount of loss in the event of breach. In this context, one can show that awarding victims full damages for breach (the “expectation damage” measure) is like strict liability in torts because it creates efficient incentives for promisors to avoid breach, but inadequate incentives for promisees to mitigate damages. (Specifically, they overrely on performance.) Cooter showed, however, that a rule that limits damages to the amount that promisors could have reasonably foreseen will, like negligence, create efficient incentives for both parties.
Property law: Cooter’s application of the model of precaution to property law concerns government takings of private property under eminent domain. In this context, the injurer’s care corresponds to the government’s taking decision, while the victim’s care represents the landowner’s initial investment in improvements to the land, which determines the value of the lost property in the event of a taking. Miceli and Segerson (1994(2), 1996(3)) apply this model to the law of regulatory takings and show that efficient decisions by both regulators and landowners can be achieved by a conditional (threshold) compensation rule that requires the government to pay compensation only when it inefficiently regulates a piece of land. >Threshold rules/Economic theories.

1. Cooter, Robert (1985). “Unity in Tort, Contract, and Property: The Model of Precaution.” California Law Review 73: 1–51.
2. Miceli, Thomas J. and Kathleen Segerson (1994). “Regulatory Takings: When Should Compensation Be Paid?” Journal of Legal Studies 23: 749–776.
3. Miceli, Thomas J. and Kathleen Segerson (1996). Compensation for Regulatory Takings: An Economic Analysis with Applications. Greenwich, CT: JAI Press.

Miceli, Thomas J. „Economic Models of Law“. In: Parisi, Francesco (ed) (2017). The Oxford Handbook of Law and Economics. Vol 1: Methodology and Concepts. NY: Oxford University Press.

Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution. Translations: Dictionary of Arguments
The note [Concept/Author], [Author1]Vs[Author2] or [Author]Vs[term] resp. "problem:"/"solution:", "old:"/"new:" and "thesis:" is an addition from the Dictionary of Arguments. If a German edition is specified, the page numbers refer to this edition.
Cooter, Robert
Parisi I
Francesco Parisi (Ed)
The Oxford Handbook of Law and Economics: Volume 1: Methodology and Concepts New York 2017

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