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Fault, Settlement, and Negligence Law


  • Daniel Kessler


State tort laws that govern the apportionment of damages from accidents often bar potential plaintiffs who played even a minor causal role in the accident from recovering damages from other culpable parties. However, anecdotal evidence suggests that judges and juries fail to enforce the letter of the law, which leads to a weaker relationship between fault in an accident and recovery for injuries than the laws would predict. Data from insurance settlements arising out of auto accidents are consistent with the anecdotal evidence. This indicates that the letter of the law may be less important in shaping individuals' behavior than scholars have supposed.

Suggested Citation

  • Daniel Kessler, 1995. "Fault, Settlement, and Negligence Law," RAND Journal of Economics, The RAND Corporation, vol. 26(2), pages 296-313, Summer.
  • Handle: RePEc:rje:randje:v:26:y:1995:i:summer:p:296-313

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    References listed on IDEAS

    1. Kathryn E. Spier, 1992. "The Dynamics of Pretrial Negotiation," Review of Economic Studies, Oxford University Press, vol. 59(1), pages 93-108.
    2. Robert Gertner & Robert Gibbons & David Scharfstein, 1988. "Simultaneous Signalling to the Capital and Product Markets," RAND Journal of Economics, The RAND Corporation, vol. 19(2), pages 173-190, Summer.
    3. Steven Shavell, 1989. "Sharing of Information Prior to Settlement or Litigation," RAND Journal of Economics, The RAND Corporation, vol. 20(2), pages 183-195, Summer.
    4. repec:hoo:wpaper:e-89-7 is not listed on IDEAS
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    6. Barry Nalebuff, 1987. "Credible Pretrial Negotiation," RAND Journal of Economics, The RAND Corporation, vol. 18(2), pages 198-210, Summer.
    7. William M. Landes, 1974. "An Economic Analysis of the Courts," NBER Chapters,in: Essays in the Economics of Crime and Punishment, pages 164-214 National Bureau of Economic Research, Inc.
    8. George L. Priest & Benjamin Klein, 1984. "The Selection of Disputes for Litigation," The Journal of Legal Studies, University of Chicago Press, vol. 13(1), pages 1-56, January.
    9. Steven Shavell, 1981. "Suit and Settlement vs. Trial: A Theoretical Analysis under Alternative Methods for the Allocation of Legal Costs," NBER Working Papers 0662, National Bureau of Economic Research, Inc.
    10. Jennifer F. Reinganum & Louise L. Wilde, 1986. "Settlement, Litigation, and the Allocation of Litigation Costs," RAND Journal of Economics, The RAND Corporation, vol. 17(4), pages 557-566, Winter.
    11. Lucian Arye Bebchuk, 1984. "Litigation and Settlement under Imperfect Information," RAND Journal of Economics, The RAND Corporation, vol. 15(3), pages 404-415, Autumn.
    12. Daughety, Adnrew F & Reinganum, Jennifer F, 1993. "Endogenous Sequencing in Models of Settlement and Litigation," Journal of Law, Economics, and Organization, Oxford University Press, vol. 9(2), pages 314-348, October.
    13. Polinsky, A. Mitchell & Rubinfeld, Daniel L., 1988. "The deterrent effects of settlements and trials," International Review of Law and Economics, Elsevier, vol. 8(1), pages 109-116, June.
    14. 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.
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    16. Salant, Stephen W., 1984. "Litigation of Settlement Demands Questioned by Bayesian Defendants," Working Papers 516, California Institute of Technology, Division of the Humanities and Social Sciences.
    17. Gerald D. Gay & Martin F. Grace & Jayant R. Kale & Thomas H. Noe, 1989. "Noisy Juries and the Choice of Trial Mode in a Sequential Signalling Game: Theory and Evidence," RAND Journal of Economics, The RAND Corporation, vol. 20(2), pages 196-213, Summer.
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    Cited by:

    1. Helen I. Doerpinghaus & Joan T. Schmit & Jason Jia-Hsing Yeh, 2008. "Age and Gender Effects on Auto Liability Insurance Payouts," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 75(3), pages 527-550.
    2. Spurr, Stephen J. & Howze, Sandra, 2001. "The effect of care quality on medical malpractice litigation," The Quarterly Review of Economics and Finance, Elsevier, vol. 41(4), pages 491-513.
    3. Eric Helland & Jonathan Klick & Alexander Tabarrok, 2005. "Data Watch: Tort-uring the Data," Journal of Economic Perspectives, American Economic Association, vol. 19(2), pages 207-220, Spring.

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