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Comparing All-Or-Nothing and Proportionate Damages: A Rent Seeking Approach

Author

Listed:
  • Jef De Mot

    (University of Ghent)

  • Thomas J. Miceli

    (University of Connecticut)

Abstract

This paper compares the all-or-nothing and proportionate damage rules for allocating damages in tort cases under evidentiary uncertainty. The focus is on how the two rules affect litigation expenditures by plaintiffs and defendants. The results of simulation experiments show that the expected judgment at trial is higher under the all-or-nothing rule for cases where the defendant did not take adequate care, but the judgment is higher under the proportionate rule when the defendant took more than adequate care. As for litigation expenditures, assuming equal costs of litigation, overall expenditures are higher under the all-or-nothing rule, except for very weak and very strong cases.

Suggested Citation

  • Jef De Mot & Thomas J. Miceli, 2014. "Comparing All-Or-Nothing and Proportionate Damages: A Rent Seeking Approach," Working papers 2014-30, University of Connecticut, Department of Economics.
  • Handle: RePEc:uct:uconnp:2014-30
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    File URL: http://web2.uconn.edu/economics/working/2014-30.pdf
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    References listed on IDEAS

    as
    1. 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.
    2. 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.
    3. Levmore, Saul, 1990. "Probabilistic Recoveries, Restitution, and Recurring Wrongs," The Journal of Legal Studies, University of Chicago Press, vol. 19(2), pages 691-726, June.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    All-or-nothing rule; proportionate damages; litigation costs; rent-seeking;

    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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