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75 Tex. L. Rev. 237 (1996-1997)
On the Genealogy of Moral Hazard

handle is hein.journals/tlr75 and id is 253 raw text is: Texas Law Review
Volume 75, Number 2, December 1996
Articles
On the Genealogy of Moral Hazard
Tom Baker*
Much of our current legal and political debate addresses a familiar
question: To what extent are those who suffer responsible for their condi-
tion? In such diverse contexts as welfare reform, tort liability, workers'
compensation, and health policy, we debate this question and a corollary:
What obligations do we have to prevent or alleviate the suffering of others?
(And, who are we? Who is other?)
In the legal academy and elsewhere, these questions increasingly are
debated within the framework of what in law schools is called law and eco-
nomics analysis (and elsewhere is called rational choice theory, neoclassical
economics, or, sometimes, simply policy analysis). Within that frame-
work, the concept of moral hazard is one of the most important, and
least well understood, of the analytical tools applied to these and other
social responsibility questions. Whether the topic is products liability law,
workers' compensation, welfare, health care, banking regulation, bankrupt-
cy law, takings law, or business law, moral hazard is a central part of the
law and economics explanation of how things as they are came to be.'
* Associate Professor of Law, University of Miami School of Law; Visiting Professor, The
Hebrew University of Jerusalem. B.A. 1982, J.D. 1986, Harvard University. Research support was
provided by the University of Miami Summer Research Grant. Thank you to Kenneth Abraham, Tan
Ayres, Michael Cohen, Mary Coombs, Steven Croley, Stephen Diamond, Clark Freshman, Paula
Gibbs, Patrick Gudridge, Stephen Halpert, James Henderson, Frances Hill, Kyle Logue, Martha
McCluskey, Bernard Oxman, Ellen Smith Pryor, Edward Rock, Charles Silver, Jonathan Simon, Alex
Stein, Deborah Stone, and Kent Syverud for helpful comments on an earlier draft of this Article.
Thank you to Nora de la Garza and Sue Ann Campbell for extraordinary assistance in obtaining
nineteenth-century source material.
1. See, e.g., WILLARD G. MANNING & M. SUSAN MARQUIS, RAND CORPORATION, HEALTH
INsURANCE: THE TRADEOFF BmrWEN RISK POOLING AND MORAL HAZ  (1989); STEVEN SHAVELL,

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