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

Author

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  • Eric Rasmusen

    (Indiana University School of Business)

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.

Suggested Citation

  • Eric Rasmusen, 1995. "``Predictable and Unpredictable Error in Tort Awards: The Effect of Plaintiff Self Selection and Signalling,''," Law and Economics 9506003, University Library of Munich, Germany.
  • 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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    References listed on IDEAS

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    Cited by:

    1. Ram Singh, 2001. "Efficient Liability Rules When Courts Make Errors in Estimation of the Harm : Complete Characterization," Working papers 99, Centre for Development Economics, Delhi School of Economics.
    2. Göran Skogh & Luisa Tibiletti, 1999. "Compensation of Uncertain Lost Earnings," European Journal of Law and Economics, Springer, vol. 8(1), pages 51-61, July.
    3. Gérard Mondello, 2017. "Lenders and Risky Activities: Strict Liability or Negligence Rule?," GREDEG Working Papers 2017-13, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), University of Nice Sophia Antipolis.

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