Rules of evidence can change behavior, as shown by this example used by philosophers. Forty…

Rules of evidence can change behavior, as shown by this example used by philosophers. Forty percent of the buses in a town are operated by the Red Bus Company, and 60 percent are operated by the Blue Bus Company. A bus unknowingly injures a bicyclist at night and the victim sues the Blue Bus Company. An eyewitness testifies that he saw a bus hit the bicyclist, but darkness prevented him from telling whether the bus was red or blue. If recovery on the probabilities is not allowed by the court, what will be the effect on incentives for precaution by the bus companies? If recovery on the probabilities is allowed, what will be the effect on the Red Bus Company’s incentives to merge with the Blue Bus Company?

 

 

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