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Tort law and probabilistic litigation: How to apply multipliers to address the problem of negative value suits

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  • De Mot, Jef
  • Depoorter, Ben
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    Abstract

    This article advances a proposal that increases access to justice for valuable lawsuits that are currently discouraged by litigation costs. Our proposal converts claims with negative expected values into positive expected value claims by implementing a novel system involving flexible conditional multipliers. Our proposal has two components. First, under the proposed system a plaintiff is allowed to select a damage multiplier that determines the amount of damages the plaintiff receives if the litigation is successful. Second, courts select cases for litigation randomly with a probability inverse to the multiplier selected by the plaintiff.

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    File URL: http://www.sciencedirect.com/science/article/B6V7M-4YVY75B-1/2/138ecb58395c433a48b2812a82173f21
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    Bibliographic Info

    Article provided by Elsevier in its journal International Review of Law and Economics.

    Volume (Year): 30 (2010)
    Issue (Month): 3 (September)
    Pages: 236-243

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    Handle: RePEc:eee:irlaec:v:30:y:2010:i:3:p:236-243

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    Web page: http://www.elsevier.com/locate/irle

    Related research

    Keywords: Litigation Procedure Tort law;

    References

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    1. Farmer, Amy & Pecorino, Paul, 1999. " Legal Expenditure as a Rent-Seeking Game," Public Choice, Springer, vol. 100(3-4), pages 271-88, September.
    2. Joel Waldfogel, 1998. "Reconciling Asymmetric Information and Divergent Expectations Theories of Litigation," NBER Working Papers 6409, National Bureau of Economic Research, Inc.
    3. Matthew Rabin & Richard H. Thaler, 2001. "Anomalies: Risk Aversion," Journal of Economic Perspectives, American Economic Association, vol. 15(1), pages 219-232, Winter.
    4. Osborne, Evan, 1999. "Who should be worried about asymmetric information in litigation?," International Review of Law and Economics, Elsevier, vol. 19(3), pages 399-409, September.
    5. Keith N. Hylton & Thomas J. Miceli, 2002. "Should Tort Damages Be Multiplied?," Working papers 2002-45, University of Connecticut, Department of Economics.
    6. Hirshleifer, Jack & Osborne, Evan, 2001. " Truth, Effort, and the Legal Battle," Public Choice, Springer, vol. 108(1-2), pages 169-95, July.
    7. Miller, James D, 1997. "Using Lotteries to Expand the Range of Litigation Settlements," The Journal of Legal Studies, University of Chicago Press, vol. 26(1), pages 69-94, January.
    8. Keith N. Hylton, 2002. "Welfare Implications of Costly Litigation under Strict Liability," American Law and Economics Review, Oxford University Press, vol. 4(1), pages 18-43, January.
    9. Siegelman, Peter & Waldfogel, Joel, 1999. "Toward a Taxonomy of Disputes: New Evidence through the Prism of the Priest/Klein Model," The Journal of Legal Studies, University of Chicago Press, vol. 28(1), pages 101-30, January.
    10. Joni Hersch & W. Kip Viscusi, 2007. "Tort Liability Litigation Costs for Commercial Claims," American Law and Economics Review, Oxford University Press, vol. 9(2), pages 330-369.
    11. Gary S. Becker, 1974. "Crime and Punishment: An Economic Approach," NBER Chapters, in: Essays in the Economics of Crime and Punishment, pages 1-54 National Bureau of Economic Research, Inc.
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    Cited by:
    1. Ramello, Giovanni B., 2012. "Aggregate litigation and regulatory innovation: Another view of judicial efficiency," International Review of Law and Economics, Elsevier, vol. 32(1), pages 63-71.

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