This paper critiques the theory of causation offered by Steven Shavell and proposes a new theory that more successfully predicts the results of proximate cause cases. Two doctrines of proximate cause exist: “direct consequences” and “reasonable foresight.” We can explain case law best if we assume that both doctrines must be satisfied in order for negligence liability to exist. Thus, the two doctrines do not represent alternative conceptions of proximate cause as some analysts have proposed. Proximate cause limitations are prominent when a party has inadvertently, as opposed to deliberately, omitted a reasonable precaution. Actors cannot efficiently reduce their inadvertent lapses to zero. In situations in which the defendant’s conduct has been “possibly efficient,” causation doctrines truncate liability. This truncation has the effect of preserving efficient activity levels and preventing actors from substituting inefficiently durable precaution for nondurable precaution.
Grady, Mark F., Causation and Foreseeability (February 19, 2013). Research Handbook on the Economic Analysis of Torts, Jennifer H. Arlen, ed., Edward Elgar Publishing, 2013; UCLA School of Law, Law-Econ Research Paper No. 13-03.