7 Coin Flips and Car Crashes: Ex Post versus Ex AnteRead more at location 1471
Note: EX POST (INFO PRIVATE). EX ANTE (INFO COP) EX ANTE: X GLI AVVERSI AL RISCHIO INCENTIVI A MINOR COSTO. RISOLTO PROBLEMA INSOLVENTI TENTATO OMICIDIO E OMO IMPOSSIBILE. PUNIRE COME PUNI EX ANTE Edit
One approach punishes people for doing things that increase the probability of accidents ex ante: speeding, drunk driving, failing to get their brakes inspected. The other punishes the undesirable outcome observed ex post, via tort liability for the damage done to the car you collide with or criminal penalties for drunk drivers who run over people.Read more at location 1483
For a less obvious example of the ex post/ex ante distinction, consider the puzzle of why we punish attempted murder. I shoot at you, and the bullet goes into a tree instead. Judged ex post, based on the damage done, there should be no punishment: Both you and the tree are fine.Read more at location 1487
Driving fast makes it more likely that you will run into someone. Shooting at people makes it more likely that you will hit them.Read more at location 1491
The ex post approach has one important advantage over the ex ante: By making it in the driver’s interest to avoid accidents, it exploits his private knowledge of how to do so.Read more at location 1499
The most dangerous thing I do is to pay attention to my conversations with other people,Read more at location 1502
but I have never gotten a ticket for it. Ex ante punishments can be imposed only on behavior that a traffic cop can observe;Read more at location 1504
Ex ante punishment makes it in my interest to take those precautions that the legal system, here represented by the legislature and the traffic cop, knows I should take and can tell if I am taking. Ex post punishment makes it in my interest to take any precautions that I know I should take and can tell if I am taking.Read more at location 1507
The speed limit is the same for everyone, from the race car driver to the teenager with a brand-new license, because the traffic cop has no easy way of distinguishing competent drivers from incompetent ones.Read more at location 1512
The advantage of ex post over ex ante punishment is very much like the advantage of an effluent fee over direct regulation.Read more at location 1517
Ex ante punishment provides incentives based on the beliefs of the people making the laws; ex post provides incentives based on the beliefs of the people the law applies to. If I believe that I can drive just fine after a shot of whiskey and two beers, the knowledge that if I have an accident terrible things will happen to me provides no special reason to avoid driving when drunk. The knowledge that if I am stopped and fail the Breathalyzer exam I will go to jail does.Read more at location 1530
If the legislators know facts about driving—that roads are especially slippery when it has just started to rain, for example—that drivers do not know, the legislators can (and do) pass that information on to the drivers in safety ads or in the booklet that everyone reads before taking his driver’s test.Read more at location 1538
The point of giving speeding tickets is that the knowledge that you might get one gives you an incentive not to drive fast. The point of punishing people for being in accidents is that the knowledge that if you are in accident you will get punished gives you an incentive not to have accidents.Read more at location 1552
To see the real advantage of ex ante punishments, consider two alternative patterns of punishment, each of which collects the same number of dollars. Under the pure ex ante rule you end up paying two hundred dollars in speeding tickets every year, and, if you injure someone else’s person or property in an accident, there is no penalty. Under the pure ex post rule there are no speed limits, and each year you have one chance in a thousand of being in an accident and having to pay a two hundred thousand dollar fine. Unfortunately, you don’t have two hundred thousand dollars in your bank account. So the result of an accident is that you forfeit everything you own, including your house, and must spend the next five years working sixty hours a week to pay back the rest of the fine.Read more at location 1555
Most of us would prefer the former pattern of punishment because most of us are risk averse.Read more at location 1562
If we are risk averse, ex ante punishment can provide the same incentive at a lower cost.Read more at location 1564
suppose the ex post fine necessary to give you an adequate incentive to avoid accidents is ten million dollars, and there is no way you can expect ever to pay that much.Read more at location 1567
The obvious answer is to switch from fines to other sorts of punishments, such as execution or imprisonment;Read more at location 1569
if it is a liability payment, it goes to the victim. But if your punishment is execution, you lose a life and nobody gains one. If your punishment is imprisonment, you lose your liberty, and the rest of us have to pay for the jail.Read more at location 1572
Here the relevant cost is not simply cost to the person being punished—imposing a cost on him is the point of the punishment, after all—but net cost on everyone affected, including the person punished, the people who collect fines, and the taxpayers who pay for prisons. It is net cost to everyone that is relevant to economic efficiency.Read more at location 1575
the advantage of ex ante punishment is that it can be done efficiently, using relatively small fines imposed with relatively high probability.Read more at location 1578
One problem with all such systems is that even if we know what rule is efficient, it is not obvious that it is in the interest of legislators or (pace Posner) judges to set efficient rules. That observation suggests that it might be worth looking for other ways of generating efficient legal rules—in particular, an efficient mix of ex ante and ex post.Read more at location 1612
Imagine that the optimal pure ex post system imposes a fine of two hundred thousand dollars for an accident, and that that is a fine that drivers can (barely) pay, making the problem one of risk aversion rather than the need to shift to less efficient punishments. We abolish all speed limits and similar regulations, set a two hundred thousand dollar fine, and permit drivers to insure against having to pay it.Read more at location 1620
One obvious approach to reducing the risk of fire is requiring sprinklers. One obvious approach to reducing the risk of accidents is requiring speed limits.Read more at location 1626
Under such a system the insurance company has an incentive to calculate the optimal tradeoff between ex post and ex ante,Read more at location 1632
The Rational Voodoo Killer: Should We Punish Impossible Attempts?Read more at location 1641
But what if I am attempting murder by a method that never works, such as sticking pins in a voodoo doll? Should that be criminal? Should we punish impossible attempts?Read more at location 1644
The legal rule we are considering is Attempts by impossible means are not punishable.Read more at location 1651
So a policy of punishing impossible attempts tends to deter real murders, murders with poison, by people who do not know whether what they think is poison will actually work.Read more at location 1657
