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The Social versus Private Incentive to Sue

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  • Thomas J. Miceli

    (University of Connecticut)

Abstract

The private value of lawsuits is based on plaintiffs' expected recovery at trial compared to their filing costs, whereas the social value consists of the incentives suits create for injurers to invest in accident avoidance. Generally, there is no relationship between these two values: there may be either too many or too few suits from a social perspective. Thus, there is scope for corrective measures, although there is no simple policy. Extending the model to consider a negligence rule rather than strict liability, and to allow for pretrial settlements, leads to some modified conclusions but does not alter the basic insights.

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File URL: http://www.econ.uconn.edu/working/2008-12.pdf
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Bibliographic Info

Paper provided by University of Connecticut, Department of Economics in its series Working papers with number 2008-12.

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Length: 21 pages
Date of creation: Apr 2008
Date of revision:
Handle: RePEc:uct:uconnp:2008-12

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Postal: University of Connecticut 341 Mansfield Road, Unit 1063 Storrs, CT 06269-1063
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Web page: http://www.econ.uconn.edu/
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Related research

Keywords: Accidents; deterrence; lawsuits; litigation costs; social versus private value;

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  1. Miceli, Thomas J. & Cosgel, Metin M., 1994. "Reputation and judicial decision-making," Journal of Economic Behavior & Organization, Elsevier, vol. 23(1), pages 31-51, January.
  2. Cooter, Robert D & Rubinfeld, Daniel L, 1989. "Economic Analysis of Legal Disputes and Their Resolution," Journal of Economic Literature, American Economic Association, vol. 27(3), pages 1067-97, September.
  3. Thomas J. Miceli, 2009. "Legal Change: Selective Litigation, Judicial Bias, and Precedent," The Journal of Legal Studies, University of Chicago Press, vol. 38(1), pages 157-168, 01.
  4. Nicola Gennaioli & Andrei Shleifer, 2007. "The Evolution of Common Law," Journal of Political Economy, University of Chicago Press, vol. 115, pages 43-68.
  5. A. Mitchell Polinsky & Yeon-Koo Che, 1991. "Decoupling Liability: Optimal Incentives for Care and Litigation," RAND Journal of Economics, The RAND Corporation, vol. 22(4), pages 562-570, Winter.
  6. Shavell, Steven, 1997. "The Fundamental Divergence between the Private and the Social Motive to Use the Legal System," The Journal of Legal Studies, University of Chicago Press, vol. 26(2), pages 575-612, June.
  7. Craswell, Richard & Calfee, John E, 1986. "Deterrence and Uncertain Legal Standards," Journal of Law, Economics and Organization, Oxford University Press, vol. 2(2), pages 279-303, Fall.
  8. Lucian Arye Bebchuk, 1984. "Litigation and Settlement under Imperfect Information," RAND Journal of Economics, The RAND Corporation, vol. 15(3), pages 404-415, Autumn.
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