Following up on my previous blog entry from this morning, I would like to make a shameless plug for my teaching note entitled “Moral Hazard, Adverse Selection, and Tort Liability”. I wrote this teaching note this past spring for my risk management students at Baylor University. The note begins by providing a brief overview of the historical development of tort doctrines that are typically applied in the area of products liability. Since strict liability has become the prevailing legal doctrine in the area of products liability, I analyze some interesting (at least I find it interesting :-)) economic consequences of this legal rule. Specifically, strict liability tends to aggravate various moral hazard and adverse selection problems, which in turn adversely affects consumer welfare. The note concludes with a discussion of Professor Steve Magee’s interesting (and somewhat controversial) theory on the optimal number of lawyers in an economy. Please send me your comments about this note by emailing me at James_Garven@baylor.edu.