This paper discusses the economics of causation in tort law, describing precise implications for precautionary incentives when courts are and are not perfectly informed. With precautionary incentives identified, we can ask whether the causation inquiry enhances welfare, and if so under what conditions. Perhaps the most important innovation applies to the Hand Formula. When causation is an issue, the probability of causal intervention should be part of the Hand test, and the generalized Hand test offers a method of distinguishing significant classes of causation cases. I close with implications for the moral significance of causation and for economic analysis of tort law.
Hylton, Keith N, Information and Causation in Tort Law: Generalizing the Learned Hand Test for Causation Cases (July 8, 2015). Boston Univ School of Law, Law and Economics Research Paper No 15-26.