Abstract Predictions can be self-fulfilling but also, and less obviously, self-negating. An elected official might predict a disaster, devote resources to mitigate the projected disaster, and then be regarded as over-cautious and wasteful when the disaster is largely avoided because of the precautions that were taken. Officials might therefore have an incentive to devote fewer resources to mitigation. This Article considers the likelihood that this is so, as it requires a limited degree of rationality on the part of voters as well as political actors. It then turns to the behavior of judges as predictors, or prophets, and the steps they can take in the form of motivating lawyers to litigate against repeat-player defendants. Conventional wisdom has it that repeat players, like factory owners that pollute, will spend more on litigation than will one-off plaintiffs that try to show they were wrongfully damaged by the defendant. The legal system can level the playing field in several ways. Most require judges to know whether they are good predictors of future and potential losses. One suggestion is that judges are unlike politicians and other investors in precautions, because judges rarely bear the cost of precaution-taking. If, for example, they see less pollution following their awarding substantial fees to plaintiff lawyers, they might reason that they brought about the correct amount of litigation or should even go further in encouraging precaution-taking.
Saul Levmore (Fri,) studied this question.