Economics Dictionary of ArgumentsHome
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| Time: A. Time is a dimension in which events are arranged. At first, no direction (before / after) is defined with this. A time direction can be obtained in the context of the Second Principle of Thermodynamics. However, a global framework must be assumed, within which there is an increase of entropy. The assumption of increasing entropy does not apply to the comparison of local events. B. In the case of the subjective time, the question of direction is less problematic. The perceived time direction is expressed by the learned use of the terms "before" and "after". See also time arrow, time travel, time reversal, symmetry, duration, space time, relativity theory, four-dimensionalism, world lines._____________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. | |||
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Donald Wittman on Time - Dictionary of Arguments
Parisi I 428 Time/ex ante/ex post/law/efficiency/incentives/Wittman: When (…) inputs occur simultaneously (equivalently, when the second party in the sequence does not have sufficient warning ahead of time), a variety of liability rules create the proper incentives for an efficient outcome. For example, under both negligence with contributory negligence and comparative negligence, the owner would be liable for all of the damage to her [good]. This would discourage owners of motorcycles from inefficiently parking their motorcycles in the middle of the road in the first place. However, when the inputs occur sequentially, none of the damage-based liability rules create the optimal incentives both for long-run efficiency and for second-best outcomes when the long-run efficient choice is not made by the first party. For example, a comparative negligence rule cannot discourage truck drivers from smashing into motorcycles and simultaneously discourage motorcyclists from leaving their motorcycles in the middle of the road. If comparative negligence provides the correct incentives for truck drivers to swerve and avoid hitting parked motorcycles, then motorcyclists will have insufficient incentive to park their motorcycles in appropriate areas in the first place. If comparative negligence provides the correct incentives for motorcyclists to park appropriately, then they will rarely park in the middle of the road; but on those occasions when they do, there will be insufficient incentives for truck drivers to optimally avoid damaging motorcycles. In a nutshell, we need a system of rules that create the right incentives for efficient behavior and at the same time create the right incentives for those second in time to respond efficiently if the first party in time acts inefficiently. Solution/Wittman: The way out of this dilemma is to have a liability rule that is based on marginal cost imposed on the other party rather than on actual damage. Parisi I 429 Because the second party is being compensated by the first, if the second party responds optimally to the first party’s suboptimal behavior, then the net liability of the second party for damage and additional prevention will be zero. >Contract law/Wittman. Parisi I 432 Time sequence/liability: (…) when there is a sequence of events, marginal cost liability should be applied regardless of whether there is damage or who is actually damaged. The law, in fact, reflects the symmetry of this analysis. A person is fined for illegal parking regardless of whether an accident occurred. Depending on which party had the last clear chance, the doctrine can be used against the defendant in favor of the plaintiff or against the plaintiff in favor of the defendant. E.g., Suppose that it was the truck that was parked illegally on the road and the motorcycle smashed into it, harming the motorcyclist but not the truck. The truck would Parisi I 433 get a ticket for illegal parking. If the motorcyclist had the last clear chance, then the motorcyclist would be liable for the damage to the motorcyclist; if the motorcyclist did not have the last clear chance, then the truck would also be liable for the damage to the motorcyclist. Parisi I 434 Rescue: (…) for there to be the correct economic incentives, both liability by the rescuee for being rescued and liability by the rescuer for non-rescue must be in place. The Continental rule employs both. In general, the Anglo-American rule employs neither; however, there are many exceptions based on special relationships. A number of statutes require a driver who is involved in an accident to offer assistance to the accident victims regardless of fault. In most American jurisdictions, the ship owner is liable if the captain fails to take reasonable measures to rescue passengers or crew who jump overboard. Passengers (crew) pay for these rescue services via higher ticket prices (lower wages). >Liability/Wittman, >Marginal costs/Wittman, >Efficiency/Wittman. Donald Wittman. “Ex ante vs. ex post”. In: Parisi, Francesco (ed) (2017). The Oxford Handbook of Law and Economics. Vol 1: Methodology and Concepts. NY: Oxford University._____________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. |
Wittman, Donald Parisi I Francesco Parisi (Ed) The Oxford Handbook of Law and Economics: Volume 1: Methodology and Concepts New York 2017 |
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