Studying Torts always reminds me of this scene from Fight Club:
Narrator: A new car built by my company leaves somewhere traveling at 60 mph. The rear differential locks up. The car crashes and burns with everyone trapped inside. Now, should we initiate a recall? Take the number of vehicles in the field, A, multiply by the probable rate of failure, B, multiply by the average out-of-court settlement, C. A times B times C equals X. If X is less than the cost of a recall, we don't do one.
Business woman on plane: Are there a lot of these kinds of accidents?
Narrator: You wouldn't believe.
Business woman on plane: Which car company do you work for?
Narrator: A major one.
This is essentially the Hand Formula from United States v. Carrol Towing, 159 F.2d 169 (2d Cir. 1947). To econ majors it's just simply cost-benefit analysis...
Narrator: A new car built by my company leaves somewhere traveling at 60 mph. The rear differential locks up. The car crashes and burns with everyone trapped inside. Now, should we initiate a recall? Take the number of vehicles in the field, A, multiply by the probable rate of failure, B, multiply by the average out-of-court settlement, C. A times B times C equals X. If X is less than the cost of a recall, we don't do one.
Business woman on plane: Are there a lot of these kinds of accidents?
Narrator: You wouldn't believe.
Business woman on plane: Which car company do you work for?
Narrator: A major one.
This is essentially the Hand Formula from United States v. Carrol Towing, 159 F.2d 169 (2d Cir. 1947). To econ majors it's just simply cost-benefit analysis...
posted by Kevin at
4/13/2003 04:44:00 PM
