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“Piggyback” Lawsuits and Deterrence: Can Frivolous Litigation Improve Welfare?

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Author Info

  • Thomas J. Miceli

    (University of Connecticut)

  • Michael P. Stone

    (Quinnipiac University)

Abstract

Previous literature on frivolous lawsuits has focused on litigation costs and the optimal settlement-trial decision of defendants, but has not examined how they affect deterrence. This paper examines whether there are circumstances under which frivolous suits might actually increase deterrence, and thereby possibly improve welfare. The reason this is possible is that in a costly legal system, injurers will generally be underdeterred because they will ignore the litigation costs of plaintiffs. The fact that some uninjured plaintiffs will succeed in obtaining settlements may therefore affect the care and activity choices of injurers in a socially valuable way.

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File URL: http://www.econ.uconn.edu/working/2013-16.pdf
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Bibliographic Info

Paper provided by University of Connecticut, Department of Economics in its series Working papers with number 2013-16.

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Length: 34 pages
Date of creation: Jul 2013
Date of revision:
Handle: RePEc:uct:uconnp:2013-16

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Postal: University of Connecticut 341 Mansfield Road, Unit 1063 Storrs, CT 06269-1063
Phone: (860) 486-4889
Fax: (860) 486-4463
Web page: http://www.econ.uconn.edu/
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Related research

Keywords: Frivolous lawsuits; care; activity level; deterrence;

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References

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  1. Rosenberg, D. & Shavell, S., 1985. "A model in which suits are brought for their nuisance value," International Review of Law and Economics, Elsevier, vol. 5(1), pages 3-13, June.
  2. Hylton, Keith N., 1990. "The influence of litigation costs on deterrence under strict liability and under negligence," International Review of Law and Economics, Elsevier, vol. 10(2), pages 161-171, September.
  3. Bebchuk, Lucian Arye, 1988. "Suing Solely to Extract a Settlement Offer," The Journal of Legal Studies, University of Chicago Press, vol. 17(2), pages 437-50, June.
  4. Katz, Avery, 1990. "The effect of frivolous lawsuits on the settlement of litigation," International Review of Law and Economics, Elsevier, vol. 10(1), pages 3-27, May.
  5. Miceli, Thomas J, 1994. "Do Contingent Fees Promote Excessive Litigation?," The Journal of Legal Studies, University of Chicago Press, vol. 23(1), pages 211-24, January.
  6. Shavell, Steven, 1985. "Uncertainty over Causation and the Determination of Civil Liability," Journal of Law and Economics, University of Chicago Press, vol. 28(3), pages 587-609, October.
  7. Lucian Arye Bebchuk & Howard F. Chang, 1994. "An Analysis of Fee-Shifting Based on the Margin of Victory: On FrivolousSuits, Meritorious Suits and the Role of Rule 11," NBER Working Papers 4731, National Bureau of Economic Research, Inc.
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