Advanced Search
MyIDEAS: Login to save this article or follow this journal

Should Plaintiffs Win What Defendants Lose? Litigation Stakes, Litigation Effort, and the Benefits of Decoupling

Contents:

Author Info

  • Albert Choi
  • Chris William Sanchirico

Abstract

In a 1991 paper, Polinsky and Che argue that lowering plaintiffs’ recovery and raising defendants’ damages can deliver the same level of deterrence with fewer filed suits. A subsequent paper by Kahan and Tuckman provisionally corroborates Polinsky and Che’s analysis in an extended model that accounts for the effect of litigation states on litigation effort levels. In contrast, we show that when litigation effort is endogenous, Polinsky and Che’s proposal to lower recovery and raise damages may no longer improve social welfare. We then characterize the kinds of suits where it is in fact suboptimal to set recovery below damages. Of significance for the current policy debate, we find that such suits share many of the empirical premises about litigation that ground conventional arguments in favor of making recovery less than damages. Our findings are robust to the possibility of out-of-court settlement, plaintiffs’ employment of contingent-fee lawyers, and alternative fee-shifting rules.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.journals.uchicago.edu/cgi-bin/resolve?id=doi:10.1086/422793
Download Restriction: Access to the online full text or PDF requires a subscription.

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Bibliographic Info

Article provided by University of Chicago Press in its journal The Journal of Legal Studies.

Volume (Year): 33 (2004)
Issue (Month): 2 (06)
Pages: 323-354

as in new window
Handle: RePEc:ucp:jlstud:v:33:y:2004:p:323-354

Contact details of provider:
Web page: http://www.journals.uchicago.edu/JLS/

Related research

Keywords:

Other versions of this item:

References

No references listed on IDEAS
You can help add them by filling out this form.

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Darius Lakdawalla & Eric Talley, 2006. "Optimal Liability for Terrorism," NBER Working Papers 12578, National Bureau of Economic Research, Inc.
  2. Claudia M. Landeo & Maxim Nikitin, 2006. "Split-Award Tort Reform, Firm's Level of Care, and Litigation Outcomes," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 162(4), pages 571-600, December.
  3. Nuno Garoupa, 2009. "Least-Cost Avoidance: The Tragedy of Common Safety," Journal of Law, Economics and Organization, Oxford University Press, vol. 25(1), pages 235-261, May.
  4. Aaron Finkle, 2010. "Contracts in the Shadow of the Law: Optimal Litigation Strategies within Organizations," International Journal of Business and Economics, College of Business, and College of Finance, Feng Chia University, Taichung, Taiwan, vol. 9(2), pages 131-155, August.
  5. Chu, C.Y. Cyrus & Chien, Hung-Ken, 2007. "Asymmetric information, pretrial negotiation and optimal decoupling," International Review of Law and Economics, Elsevier, vol. 27(3), pages 312-329, September.
  6. Landeo, Claudia M. & Nikitin, Maxim & Babcock, Linda, 2007. "Split-awards and disputes: An experimental study of a strategic model of litigation," Journal of Economic Behavior & Organization, Elsevier, vol. 63(3), pages 553-572, July.
  7. Philip Bond, 2004. "Optimal plaintiff incentives when courts are imperfect," 2004 Meeting Papers 723, Society for Economic Dynamics.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:ucp:jlstud:v:33:y:2004:p:323-354. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Journals Division).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.