TY - JOUR AU - Schauer,Frederick AU - Zeckhauser,Richard TI - The Trouble with Cases JF - National Bureau of Economic Research Working Paper Series VL - No. 15279 PY - 2009 Y2 - August 2009 UR - http://www.nber.org/papers/w15279 L1 - http://www.nber.org/papers/w15279.pdf N1 - Author contact info: Frederick Schauer University of Virginia School of Law 580 Massie Rd. Charlottesville, VA 22903 E-Mail: schauer@virginia.edu Richard J. Zeckhauser John F. Kennedy School of Government Harvard University 79 John F. Kennedy Street Cambridge, MA 02138 Tel: 617/495-1174 Fax: 617/384-9340 E-Mail: richard_zeckhauser@harvard.edu M1 - published as Frederick Schauer, Richard Zeckhauser. "The Trouble with Cases," in Daniel P. Kessler, editor, "Regulation vs. Litigation: Perspectives from Economics and Law" University of Chicago Press (2011) AB - For several decades now a debate has raged about policy-making by litigation. Spurred by the way in which tobacco, environmental, and other litigation has functioned as an alternative form of regulation, the debate asks whether policy-making or regulation by litigation is more or less socially desirable than more traditional policy-making by ex ante rule-making by legislatures or administrative agencies. In this paper we step into this debate, but not to come down on one side or another, all things considered. Rather, we seek to show that any form of regulation that is dominated by high-salience particular cases is highly likely, to make necessarily general policy on the basis of unwarranted assumptions about the typicality of one or a few high-salience cases or events. Two cornerstone concepts of behavioral decision – the availability heuristic and related problems of representativeness – explain this bias. This problem is virtually inevitable in regulation by litigation, yet it is commonly found as well in ex ante rule-making, because such rule-making increasingly takes place in the wake of, and dominated by, particularly notorious and often unrepresentative outlier events. In weighing the net advantages of regulation by ex ante rule-making against those of regulation by litigation, society must recognize that any regulatory form is less effective insofar as it is unable to transcend the distorting effect of high-salience unrepresentative examples. ER -