Jim Whitney Economics 495

Redundant causation

Situation as described by Friedman:
2 potential hunters pose a risk to hunter Carl:
(1) Each has a 10% probability of fatally shooting Carl.
(2) The value of Carl = $1 million
   
The question: To promote efficiency, how much should each hunter be liable for if both independently shoot Carl?
    (1) Friedman says: $0: Since the second bullet causes no further harm, the 
        MCbullet2 = 0
Notice from the diagram that this remedy means that, if there is one hunter, that hunter faces a 10% risk of liability, but if there are two hunters, each hunter faces only a 9% risk of liability.
    Friedman asserts that assessing no liability in this situation is efficient since the additional hunter who fires the second bullet increased Carl's total risk of harm by only 9% which matches the 9% risk of liability built into this rule.

    (2) DrJ says: $1,000,000 if both hunters are negligent and both shoot Carl. Since they are both negligent, neither has taken sufficient cost-effective precautions in their decision to hunt, so the optimal number of hunters (besides Carl) = 0.
    That means that both hunters should consider themselves as hunter #1, not hunter #2. They should both therefore internalize the full 10% risk of harm and the resulting expected damage of $100K.
    That supports the decision made in Kingston v. Chicago & N. W. Ry. Co. (1927). The source of only one of the two fires was sued, and that party was assessed full damages.