Gerrit De Geest (Washington University in Saint Louis - School of Law) has posted N Problems Require N Instruments on SSRN. Here is the abstract:
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If a legal system wants to solve five problems (for instance, four different incentive problems and a risk problem), it needs five different instruments (rules or doctrines that specifically address the problem). This is a fundamental principle of good lawmaking. Yet this principle is often violated in normative discussions on the law. For instance, in the discussion on the optimal remedies for contract breach, the question is often framed as which single instrument (i.e., contract remedy) is best suited to solving numerous incentive and risk problems at the same time.
Using a single instrument for two or more problems has two disadvantages. First, the effectiveness of such a compromise instrument is usually limited, especially if the relative social importance of the problems is unequal. Second, the optimal compromise instrument often becomes indeterminate, because setting the compromise optimally requires empirical information on the relative social importance of the problems, which is hard to acquire.
Given the intrinsic disadvantages of compromise instruments, I suggest that they should only be used when two conditions are met. The first condition is that all the underlying problems are nearly completely nonverifiable (that is, they refer to behavior that is very hard to prove in courts, so that fault-based instruments are not workable and pricing instruments must be used instead). The second condition is that the problems are roughly equal in terms of social importance. More specifically, I suggest adopting the 10% importance rule: simply give up minor problems with a social importance of less than 10% of the total, because in those cases the benefits of a compromise rule become so small that they are unlikely to outweigh the additional costs in terms of legal complexity and overshooting errors.
In the second part of the paper, I show that when these guidelines are applied, the theoretical indeterminacy surrounding optimal remedies for contract breach largely disappears.
And from the article:
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Example: Aristotle’s view on tort law. One of the earliest implicit applications of the N instruments for N problems rule is Aristotle’s analysis of corrective justice. In the old Greek legal system, an injurer could escape tort liability for an accident by showing, for instance, that he had been courageous at the time he was a soldier. Aristotle’s notion of corrective justice attempted to stop such arguments by stating that the only goal of tort law was to correct the equilibrium that existed just before the accident.
Let’s reframe this in terms of problems and instruments. What was wrong with the old Greek practice of giving weight to courage-at-the-battlefield arguments in tort litigation? A single instrument (tort liability) was used for two policy targets (inducing optimal care on roads and optimal courage on battlefields). Because a single instrument was used, the incentives to be careful were less than perfect because careless tortfeasors were not always held fully liable, and the incentives to be courageous on battlefields may have been imperfect as well. It is also obvious that the informational requirements for weighing both factors were enormous. Aristotle’s corrective justice concept solved both problems by using one instrument per problem.
Very interesting.