Negligence, Causation, and Incentives for Care

We present a new model of negligence and causation and examine the influence of the causation test on the level of care under negligence. In this model, the injurer’s decision to take care reduces the likelihood of an accident only in the event that some nondeterministic intervention occurs. The effects of the causation test depend on the information available to the court, and the manner in which the test is implemented. The key effect of the causation test is to induce actors to take into account the distribution of the intervention probability as well as its expected value. In the most plausible scenario – where courts have limited information – the causation test generally leads to socially excessive care.  Boston University, Law School, [email protected]. We thank Steve Marks, Ken Simons, Ted Sims, Mike Meurer, and David Walker for helpful comments on an early draft.  Indiana University, Kelley School of Business, [email protected].