Emergent Order, Agent-Based Modeling, and Economic Analysis of Accident Law

The purpose of this project is to examine the benefits of basing economic analysisof accident law on the notion that individuals form a spontaneous order as they respondto the institution of tort law, each other, and their environment. Furthermore, I examinethe efficacy of agent-based modeling as an analytical tool that exploits this realization. Idiscuss the theoretical implications of the neoclassical analytical perspective and offer analternative based upon the insights of spontaneous order economics.I develop an artificial society in which virtual agents pursue productive, thoughinherently accident prone, activity. The accidents that occur are chance encounters andagents bear a private cost for engaging in behavior that reduces their likelihood. First, Iemploy empirical techniques based on neoclassical theory and fit regression models tosimulation data in order to determine the wealth maximizing behavior under variousliability rules. I confirm some of the major theoretical conclusions but I also identifyseveral common simplifying assumptions that may adversely affect the accuracy ofconclusions under certain circumstances.I contrast the mainstream mode of analysis with an evolutionary approach thatuses a computational model comprised of heterogeneous agents that implementsatisficing algorithms to select strategies on the basis of their individual experience. Thepower of this perspective is not simply that it assists in developing a genetic-causalexplanation as a means for evaluating the desirability of various liability rules, but itenables the detailed exploration of population dynamics and a close examination of out ofequilibrium behavior. I find that for the artificial society under consideration, systemlevel steady-state does not necessarily imply agent equilibrium, agents often elect to becareful even when the neoclassical theory predicts otherwise, and negligence rules differin their ability to rid society of negligent behavior. Ultimately, I conclude that theemergent approach is complementary to the mainstream neoclassical perspective andholds the promise of opening up new avenues for future research.