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

  • De Mot, Jef
  • Depoorter, Ben
Registered author(s):

    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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    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
    Contact details of provider: Web page: http://www.elsevier.com/locate/irle

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    1. Keith N. Hylton & Thomas J. Miceli, 2005. "Should Tort Damages be Multiplied?," Journal of Law, Economics and Organization, Oxford University Press, vol. 21(2), pages 388-416, October.
    2. Waldfogel, Joel, 1998. "Reconciling Asymmetric Information and Divergent Expectations Theories of Litigation," Journal of Law and Economics, University of Chicago Press, vol. 41(2), pages 451-76, October.
    3. Farmer, Amy & Pecorino, Paul, 1999. " Legal Expenditure as a Rent-Seeking Game," Public Choice, Springer, vol. 100(3-4), pages 271-88, September.
    4. Gary S. Becker, 1968. "Crime and Punishment: An Economic Approach," Journal of Political Economy, University of Chicago Press, vol. 76, pages 169.
    5. Matthew Rabin & Richard H. Thaler, 2001. "Anomalies: Risk Aversion," Journal of Economic Perspectives, American Economic Association, vol. 15(1), pages 219-232, Winter.
    6. 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.
    7. 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.
    8. 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.
    9. Hirshleifer, Jack & Osborne, Evan, 2001. " Truth, Effort, and the Legal Battle," Public Choice, Springer, vol. 108(1-2), pages 169-95, July.
    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. 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.
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