Efficient Warnings, Not “Wolf or Puppy” Warnings

Efficient Warnings, Not “Wolf or Puppy” Warnings. Richard Zeckhauser, September 2016, Paper, "Governments often require that products carry warnings to inform people about risks. The warnings approach, as opposed to the command and control approach to risk regulation, functions as a decentralized regulatory mechanism that empowers individuals to make decisions that take into account their own circumstances and preferences. Thus, individuals will be aware of the risks and the value of taking precautions, and they may avoid a product that others consume if they find the risk unacceptable. Ideally, warnings would allow individuals to assess both their personal level of risk and the benefits they will receive from another unit of consumption. Then those receiving positive expected benefits will consume more; those receiving negative net benefits will curtail their consumption."