The Third Assumption

Now consider the third assumption: namely, the only relevant effect of implementing the system will be to reduce the loss from crimes.

What if this is not true? What if, for example, implementing the security system make authorized access so difficult that the loss in time and productivity was more than the $4,000,000 saved by using the system? Then it would not be efficient for ChoicePoint to buy and implement the system. Society would save more if it did not do so.

Determining what allocation of liability is efficient can be a complex task where the various possible options have complex, interrelated effects.

You have completed this tutorial.