Economic analysis of tort law

Economic analysis of tort law examines how legal rules influence behavior to maximize overall well-being. It considers how assigning liability and damages encourages individuals and companies to avoid causing harm, allocate resources efficiently, and internalize the true costs of their actions. By analyzing incentives, this approach aims to create a legal system that minimizes accidents and promotes economically beneficial outcomes, balancing fairness with efficiency. Ultimately, it seeks to use tort law as a tool to reduce harmful conduct while encouraging cautious and responsible decision-making.