Calabresi and Behavioural Tort Law and Economics

Written in honour of Guido Calabresi, this essay discusses critically several of the basic assumptions of the neo-classic model of tort law: one being that rational individuals will respond to applicable tort rules, striving to maximise their utility and to satisfy their own self-interest. Insights from behavioural law and economics are used to show that decision-making often takes place in a way that is different from that assumed by traditional economic models. The paper discusses the consequences of the behavioural literature for the economic analysis of law. It also demonstrates that Calabresi's approach to tort law is more differentiated and flexible than some of the more formal models. This approach has the advantage that it allows one to take into account all kinds of cognitive limitations, errors, and information problems, as did Calabresi himself in many of his publications on this issue in the 1960s and 1970s. The paper illustrates how Guido Calabresi was already aware of cognitive limits: for instance, concerning the ability of parties to assess how much they should spend ‘for their own good’. This led him to arrive at balanced conclusions with regard to normative consequences of these limits. Many of the ideas of behavioural law and economics were hence already implicit in Calabresi's writings.