Working Paper No. 04-13:
Causation and Responsibility: The Compensation Principle From Grotius to Calabresi

Author(s):

Francesco Parisi, Vincy Fon

Date Posted: 2004

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Abstract:

Calabresi often lamented that insufficient consideration had been given in the legal and economic literature to the idea of distributing an accident loss among a faultless tortfeasor and an innocent victim on the basis of the relative causal contribution of the parties to the loss. This criterion of apportionment of liability, which Calabresi calls 'comparative causation,' is the object of this paper. We present a brief intellectual history of the principle of comparative causation, and provide a positive economic model that explains the rise and fall of this criterion of liability in historical and contemporary societies. In order to identify the structural features of this standard, we consider how a rule of comparative causation would perform in the absence of other liability rules, when applied as a general and sole basis of liability. The positive economic model of comparative causation brings to light some interesting features of the rule, but also unveils the limits of such criterion of liability with respect to the induced activity and care levels. The paper then extends the economic model to consider the workings of the comparative causation rule in conjunction with negligence rules. The combined application of the comparative causation and negligence rules induces the parties to minimize their expected liability by moderating their activity level: a combination of incentives that no known liability rule provides.