The Social versus Private Incentive to Sue

No 2008-12, Working papers from University of Connecticut, Department of Economics

Abstract: The private value of lawsuits is based on plaintiffs' expected recovery at trial compared to their filing costs, whereas the social value consists of the incentives suits create for injurers to invest in accident avoidance. Generally, there is no relationship between these two values: there may be either too many or too few suits from a social perspective. Thus, there is scope for corrective measures, although there is no simple policy. Extending the model to consider a negligence rule rather than strict liability, and to allow for pretrial settlements, leads to some modified conclusions but does not alter the basic insights.

Keywords: Accidents; deterrence; lawsuits; litigation costs; social versus private value (search for similar items in EconPapers)
JEL-codes: K13 K40 K41 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-law
Date: 2008-04
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