The Hand rule says that...

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The question centers on the Hand rule, a classical negligence standard that weighs the burden of precautions against the potential loss. 
Option 1: 'you're negligent if you failed to take a precaution which would have prevented the accident' In the Hand formula, negligence is found when the burden of precautions is less than the product of the probability of loss and the gravity of the loss (B < PL). Saying a precaution would have prevented the accident aligns with the idea that taking such a precaution would have reduced or avoided the harm, and therefore failing to take it can be negligent. This option follows the typical risk-utility interpretation. 
Option 2: 'you're negligent if you failed to take a precaution which would have been efficient' The term 'efficient' is ambiguous here and not standard in the Hand rule. The rule uses the concept of likelihood and severity of harm relative to the burden of precautions, not a generic notion of efficiency. This wording misstates the framework, making the claim incorrect or at least imprecise. 
To summarize the contrast: the first option ties negligence to a precaution that would have prevented the harm (consistent with the idea that B < PL justifies breach), while the second option relies on an unclear 'efficient' benchmark that does not map onto the Hand reasoning. Overall, the statement in option 1 reflects the proper risk-utility approach described by the Hand rule, whereas option 2 misdefines the criterion by invoking 'efficient' without tying it to preventable harm or the B vs PL comparison.

SU25 ECON 522 001 ZFF Self Quiz, Week 4 part 1

The Hand rule says that...

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