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``Predictable and Unpredictable Error in Tort Awards: The Effect of Plaintiff Self Selection and Signalling,''

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Author Info
Eric Rasmusen (Indiana University School of Business)

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Abstract

If a potential tort plaintiff can predict that the court will overestimate damages he is more likely to bring suit, but if the court is aware of this, it will adjust its awards accordingly. In general, court error implies that the court should moderate extreme awards whether they are high or low, because of regression towards the mean. Predictable error, however, tends to push the optimal adjustment downwards and unpredictable error pushes it upwards, because of plaintiff selection and signalling, respectively. The expectation of either kind of error leads plaintiffs to bring meritless suits.

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Publisher Info
Paper provided by EconWPA in its series Law and Economics with number 9506003.

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Date of creation: 14 Jun 1995
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Handle: RePEc:wpa:wuwple:9506003

Note: A 79KB LaTeX file. A postscript file is available on request from Erasmuse@Indiana.edu.
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K - Law and Economics

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

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    Other versions:
  2. Hylton, Keith N, 1993. "Asymmetric Information and the Selection of Disputes for Litigation," Journal of Legal Studies, University of Chicago Press, vol. 22(1), pages 187-210, January.
  3. 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. [Downloadable!] (restricted)
  4. Shanley, Michael G, 1991. "The Distribution of Posttrial Adjustments to Jury Awards," Journal of Legal Studies, University of Chicago Press, vol. 20(2), pages 463-81, June.
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  6. Polinsky, A Mitchell & Shavell, Steven, 1989. "Legal Error, Litigation, and the Incentive to Obey the Law," Journal of Law, Economics and Organization, Oxford University Press, vol. 5(1), pages 99-108, Spring.
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  10. 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. [Downloadable!] (restricted)
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  11. I.P.L. P'ng, 1983. "Strategic Behavior in Suit, Settlement, and Trial," Bell Journal of Economics, The RAND Corporation, vol. 14(2), pages 539-550, Autumn. [Downloadable!] (restricted)
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  13. Bebchuk, Lucian Arye, 1988. "Suing Solely to Extract a Settlement Offer," Journal of Legal Studies, University of Chicago Press, vol. 17(2), pages 437-50, June.
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  14. Rasmusen, Eric, 1992. "Managerial Conservatism and Rational Information Acquisition," Journal of Economics & Management Strategy, Blackwell Publishing, vol. 1(1), pages 175-201, Spring.
  15. 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.
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  17. A. Mitchell Polinsky & Daniel L. Rubinfeld, 1988. "The Welfare Implications of Costly Litigation in the Theory of Liability," NBER Working Papers 1834, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  18. 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. [Downloadable!] (restricted)
  19. Bharat Sarath, 1991. "Uncertain Litigation and Liability Insurance," RAND Journal of Economics, The RAND Corporation, vol. 22(2), pages 218-231, Summer. [Downloadable!] (restricted)
  20. Daniel L. Rubinfeld & David E.M. Sappington, 1987. "Efficient Awards and Standards of Proof in Judicial Proceedings," RAND Journal of Economics, The RAND Corporation, vol. 18(2), pages 308-315, Summer. [Downloadable!] (restricted)
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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Göran Skogh & Luisa Tibiletti, 1999. "Compensation of Uncertain Lost Earnings," European Journal of Law and Economics, Springer, vol. 8(1), pages 51-61, July. [Downloadable!] (restricted)
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