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The Impact of Frivolous Lawsuits on Deterrence: Do They Have Some Redeeming Value?

Author

Listed:
  • Michael P. Stone

    (Quinnipiac University)

  • Thomas J. Miceli

    (University of Connecticut)

Abstract

The literature on frivolous lawsuits has focused on litigation costs and the optimal settlement-trial decision of defendants, but has not examined how they affect the decisions of potential injurers. This paper asks whether there are circumstances under which frivolous suits might actually increase social welfare by inducing parties engaged in risk activities to limit the scale, and improve the safety, of those activities. The reason this is possible is that in a costly legal system, injurers will generally underinvest in safety and overengage in the activity. The fact that some uninjured plaintiffs succeed in obtaining settlements may therefore affect the care and activity choices of injurers in a socially valuable way. In light of these conclusions, the paper goes on to examine the desirability of various policies aimed at curbing frivolous litigation.

Suggested Citation

  • Michael P. Stone & Thomas J. Miceli, 2013. "The Impact of Frivolous Lawsuits on Deterrence: Do They Have Some Redeeming Value?," Working papers 2013-26, University of Connecticut, Department of Economics.
  • Handle: RePEc:uct:uconnp:2013-26
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    Cited by:

    1. Kim, Chulyoung, 2015. "Judge's Gate-Keeping Power and Deterrence of Negligent Acts: An Economic Analysis of Twombly and Iqbal," MPRA Paper 69836, University Library of Munich, Germany.

    More about this item

    Keywords

    Frivolous lawsuits; care; activity level; deterrence;

    JEL classification:

    • K13 - Law and Economics - - Basic Areas of Law - - - Tort Law and Product Liability; Forensic Economics
    • K41 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Litigation Process

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