A. Give two examples, with no more than a sentence or two of explanation for each. Describe, briefly, the general argument for freedom of contract. Under a rule of no liability, every time I drive I accept my share of the cost of automobile accidents. B. Suppose the legal rule is that whichever driver was going faster when an accident occurred is liable to the other for any damage done. C. Consider a one-sided accident.
Cars do significant damage to pedestrians, pedestrians do negligable damage to cars.
E. Suggest an alternative rule that solves some of the problems you have mentioned with these rules. Suppose it costs nothing to catch and punish criminals. Explain why stigma might be an even more efficient punishment than a fine. The ratio of net cost to amount of punishment is lower for some punishments, making them more efficient. You have been appointed to regulate the local electric utility.