Causation and the Incentives of Multiple Injurers
34 Pages Posted: 19 Apr 2019
Date Written: April 15, 2019
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 that is 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. Contrary to a widely accepted view, we find that incentives may be insufficient under but-for causation, since one injurer's negligence may lower the impact of another injurer's negligence, in which case there may exist both an efficient and an inefficient Nash-equilibrium. When standards of due care are set optimally, this can only occur 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.
Instead of but-for causation, broader notions of causation may be applied; the Third Restatement of Tort Law advocates the NESS-test. We compare this test with the Shapley-value and find that while both yield efficiency when injurers act simultaneously, the latter does so in a less inclusive manner.
Finally, we consider rules adjacent to the concept of causation in the light of our analysis, for example, the rule concerning the burden of proof of divisibility of damages and the treatment of over-determined injury when one of the factors sufficient for the harm is a non-negligent act or occurrence.
Keywords: Law and Economics, Tort, Causation, NESS-test, Shapley-value
JEL Classification: K13
Suggested Citation: Suggested Citation