Causation and the Incentives of Multiple Injurers
33 Pages Posted: 29 Jun 2017 Last revised: 19 Dec 2018
Date Written: December 17, 2018
Under the but-for requirement of causation, a tort injurer cannot be held liable for more than the difference between the loss the victim would have suffered if the injurer had not been negligent, and the loss actually suffered by the victim. We ask whether this causation requirement yields efficient care levels when two or more injurers act simultaneously under the negligence rule. We find, contrary to a widely accepted view, that incentives may be insufficient under but-for causation. The basic reason is that one injurer's negligence may lower the impact of another injurer's negligence, in which case an efficient and an inefficient Nash-equilibrium may co-exist. When standards of due care are set optimally, this may occur only when there is multiple sufficient causation (as when either of two injurers' negligent acts is in itself sufficient for part or all of the injury) and/or when a negligent act confers a benefit to the victim involving another good than the good actually harmed. This suggests that efficiency can be achieved by slight modification of the requirement of but-for causation.
Alternatively, broader notions of causation may be applied; the Third Restatement of Tort Law advocates the NESS-test. We compare it with the Shapley-value and find that while both yield efficiency when injurers act simultaneously, the latter does so in a less inclusive manner.
Keywords: Multiple tortfeasors, causality, but-for test, optimal incentives
JEL Classification: K13, K40
Suggested Citation: Suggested Citation