antitrust case. A lawsuit in which a business or businesses are accused of economic harm due to excessive or unfair influence on market outcomes.
arbitration. Dispute resolution facilitated by a neutral-binding third party.
back pay. In employment law, back pay concerns the amount of labor earnings that a person could reasonably earn in the past.
barrier to entry. In the context of markets, an encumbrance that blocks additional firms from joining the market as sellers.
bench trial. A trial with a judge but no jury.
breach of contract. One party’s wrongful harm to another caused by failure to uphold a business contract between them, for which courts provide a remedy.
bundling. A situation in which a firm offers for sale a combination of goods that, in principle, could be sold separately.
business liability. Debts or other obligations owed by a business to an individual, a group, or an organization.
collusion. Secret or illegal cooperation.
cause in fact. In a court case, a cause in fact is the exclusive and conclusive cause of harm.
ceteris paribus. All else equal.
civil law, substantive. Laws concerning actions that are noncriminal yet against society’s interests.
civil law, procedure. The legal procedure by which a judge relies on statutes or other “black letter” instructions to decide court cases.
claims adjuster. In an insurance company, claims adjusters gather evidence about loss claims and negotiate settlements with those making the claims.
claims adjuster, independent. An outside, or for-hire, claims adjuster hired by an insurance company to gather evidence of liability and loss.
claims adjuster, public. An outside, or for-hire, claims adjuster hired by an insurance claimant company to gather evidence of liability and loss.
class action case. A lawsuit in which multiple people claim injury or harm of the same sort and are jointly included in the legal action against the alleged wrongdoer.
common law. The legal procedure by which a judge relies on past court decisions—precedent—to decide court cases.
competitive equilibrium. A market situation with many buyers and sellers of a good, such that the quantity supplied equals the quantity demanded.
complement. In economics, if one good (call it A) is a complement for another (call it B), then A is used together with B, and so the demand for A falls when B becomes more scarce or costly.
collateral source. In law, with regard to a wrongful economic loss a collateral source is some opportunity to recover from loss, available to the loss sufferer from their own resources or community, which the court refuses to consider as an offset to the amount owed by the party causing loss.
cost of capital. The interest or return on investment that a business must pay in order to attract funds to pay for its business activities.
counsel. In law, a lawyer acts as counsel when representing the interests of their client in negotiations or legal proceedings.
damages. Court-awarded monetary transfers that compensate for economic or pecuniary loss.
deposition. An interrogation of a witness by opposing counsel, while under oath, before trial.
descriptive statistic. For a data set consisting of number values, a descriptive statistic serves to summarize or describe the information in the number values.
discovery. Evidence gathering.
duty of care. In tort law, duty of care is a responsibility held by a party toward others to reasonably prevent harm. A failure to perform a duty of care may imply negligence.
earnings capacity. In law, earnings capacity is the ability to do work and receive wages.
earnings stream. A sequence of earnings, or payments, over time.
econometrics. The application of statistics to economics. See economics.
economics. The social science dealing with the production, distribution, and consumption of goods and services.
economic damages. In tort and contract law, economic damages are wrongful economic costs imposed by one party (the defendant) on the other party (the plaintiff).
economic expansion. A period of time in which the national economy is producing output at a rate that is significantly above its optimal level, given its resources and institutions.
economic loss. The destruction of economic opportunity. See economic opportunity.
economic opportunity. A means of deriving utility from goods consumption now or in the future. See utility.
economic recession. A period of time in which the national economy is producing output at a rate that is significantly below its optimal level, given its resources and institutions.
economic risk. Uncertainty about future economic outcomes.
egalitarianism. A political philosophy in which people should be treated as equals, or receive the same opportunities.
evidentiary standard. At trial, an evidentiary standard is a standard or criterion for the admissibility of evidence.
externality, negative. Costs to people not involved in an activity.
externality, positive. Benefits to people not involved in an activity.
first fundamental welfare theorem. An economic theory in which markets provide a socially optimal way of allocating society’s resources and distributing its goods to people, except in special circumstances.
forensic economist. An economist who serves as a consultant or expert in disputes involving economic loss; he or she is qualified to see, produce, or interpret evidence in a way that may clarify its meaning to the parties in a dispute.
front pay. In employment law, front pay concerns the amount of labor earnings that a person could reasonably earn in the future.
good faith. Honesty or sincerity of intention.
goods. Anything satisfying human needs and wants, providing utility, including life-enhancing experiences, and vehicles thereof.
hypothesis test. In statistics, a hypothesis test uses a data sample to weigh evidence on two or more competing hypotheses about what is happening in the population from which the sample was drawn.
implicit rate of return. For a future earnings stream, with a known price for the stream and given values of expected future earnings, the implicit rate of return equates price with the (time-discounted) present value of expected earnings.
insurance. A contract in which one party meets the obligations of another under specific conditions.
insurance, first party. Insurance owned by one party that covers losses incurred by that party.
insurance, third party. Insurance owned by one party that covers losses incurred by another party.
intentional tort. In law, an intentional tort is a civil wrong or harm that is intentionally caused by the offending party—or tortfeasor.
liability, business (legal). Situations, identified by the law, where a business is found to bear obligation to an individual, a group, or an organization.
liability, legal. Situations, identified by the law, where an individual, a group, or an organization is found to bear obligation to another.
liability, strict. In law, strict liability is the responsibility for causing harm, regardless of intent or disposition.
liability, joint and several. In law, joint and several liability is a responsibility for causing harm, shared by two or more parties.
life care plan. For a person who has suffered a permanent injury or disability, a life care plan is a scheduled set of medical and health-related services and goods, designed to restore the injured person to a state of health and function as good as the person had before the injury, or as near as possible to that state.
life expectancy. The number of future years during which a person can be expected to live.
life expectancy, healthy. The number of future years during which a person can be expected to live and remain healthy.
lump sum. An amount of money paid all at once.
market. An institution that facilitates the distribution of goods to society, via buyers’ payment of money for sellers’ goods, at a known price.
market equilibrium. A situation in which the quantity demanded of a good equals the quantity supplied, at a particular price.
market foreclosure. The act of blocking some sellers’ or buyers’ access to a market.
mean. For a random variable, the mean value is a measure of central tendency, describing the middle of the probability distribution.
mediation. Dispute resolution facilitated by a neutral nonbinding third party.
monopoly. A situation in which a single firm supplies all the goods to a market.
moral hazard. An excessive shift of risk from one party to another due to risk avoidance.
motion in limine. A request made by one party of a legal dispute for the court to suppress evidence presented by another party.
natural monopoly. A situation in which a single large-scale firm is able to produce goods more efficiently than could a collection of small-scale firms.
negligence, tort. A tort, or harm to society, arising from lack of due care.
nuisance, tort. In civil law, nuisance is a tort in which one party wrongfully controls another’s property.
oligopoly. A situation in which a few firms provide all the output to a market.
opportunity cost. The difference in value between a given opportunity and the next best available opportunity.
option, financial. The right to buy or sell a financial asset at a given price—called the strike price—within a specific time period.
option, real. Options available to businesses to pursue future earnings opportunities.
Pareto optimal. A Pareto optimal outcome is a socially best outcome in which no one person can be made better off without making someone else worse off.
pecuniary loss. A loss of money, assets, or the opportunity to earn money. Financial losses that can be precisely measured. See also economic loss and economic damages.
personal consumption. The amount of goods consumed by an individual that are not jointly consumed by others.
plaintiff. In civil law, a plaintiff is the party bringing suit via a complaint to the court.
precedent. In law, a precedent is one court’s ruling on a legal case that is relied upon by other courts facing similar cases.
probability. For an event, its probability is the chance that the event will occur.
probative value. The ability of proffered evidence to prove something important in a trial.
procedural law. Laws that specify how litigants may present their cases before the court, separate from substantive law—laws that specify how courts may reach a decision on a case, based on the evidence.
property. Anything, tangible or intangible, that is owned by a person or entity. Also, the right to possess, keep, hold, use, enjoy, and dispose of what is owned.
proximate cause. In a court case, a proximate cause is an event sufficiently related to the harm or injury in question to be held as its cause.
public good. A good which a market cannot provide adequately, either because nonbuyers cannot be excluded from its use or, similarly, because a single unit of the good can be enjoyed by more than one person at a time.
random variable. A variable whose value is random and not perfectly predictable.
regression model. A statistical model of the expected value of one variable, given some other variables.
return. For a financial investment, the investment’s return is the amount of money it produces, often expressed as a ratio of money received to money invested (gross return) or as the ratio of profit to money invested (net return).
return, excess. The financial return earned by a risky asset minus the interest rate or yield on a riskless bond.
risk-averse preference. An attitude that views risky economic opportunities as less desirable than riskless opportunities having the same expected rewards.
risk-neutral preference. An attitude that views risky economic opportunities as perfect substitutes for opportunities having the same expected rewards.
settlement hearing. In a tort trial, a settlement hearing is a private meeting between the plaintiff, defendant, their lawyers, and the judge, with the aim of reaching a settlement before trial.
Sharpe ratio. A measure of the attractiveness of a financial investment or portfolio of such investments, the Sharpe ratio is the investment’s excess return divided by the standard deviation of return.
social contract. An idea or framework that serves to define and limit the rights and responsibilities of society’s members.
social welfare function. Society’s collective or aggregate utility associated with consumption by its members. See also utility.
special damages. In tort law, special damages refer to relatively concrete, tangible, or readily monetized losses.
speculation. In law, speculation is opinion lacking foundation in fact or evidence.
standard deviation. A measure of spread or dispersion among the possible values of a random variable, equal to the square root of variance. See also variance.
statistical model. A mathematical model of some pattern, tendency, or relationship in a data set. Statistical models are applied to a data sample and are often used to better understand a larger population.
substantive laws. Laws that specify how courts may reach a decision on a case, based on the evidence.
substitute. In economics, if one good (call it A) is a substitute for another (call it B), then A can be used in place of B, and so the demand for A rises when B becomes more scarce or costly.
substitute, perfect. In economics, one good is a perfect substitute for another if the first can be used in place of the other, with no loss of utility.
state of nature. A possible situation or outcome.
statute. A written law passed by a legislative body.
structured settlement. An amount of money paid over time.
taking. In law, a taking is the act of laying hold upon something.
tort. One party’s wrongful harm to another, notwithstanding any business contract between them, for which courts provide a remedy.
tortfeasor. In civil law, a tortfeasor is one who commits a wrongful (tort) act.
transfer. In economics, a transfer—or transfer payment—is a redistribution of goods, income, or resources within society.
trespass, tort. In civil law, trespass is a tort in which one party wrongfully occupies another’s property.
trier of fact. The person or persons responsible for determining facts from evidence in a dispute.
utility. In economics, utility is usefulness, the ability to satisfy needs or wants.
variable. A quantity that can take on different values in different situations.
value of a statistical life. For a person facing an opportunity to take on increased chance of death in exchange for some money, the value of a statistical life is the dollar price per unit of death probability.
variance. A measure of spread or dispersion among the possible values of a random variable, equal to the mean squared deviation of the variable from its mean. See also standard deviation.
worklife expectancy. The number of future years during which a person can be expected to work. See also life expectancy.