Shifting Plaintiffs' Fees versus Increasing Damage Awards

Louis Kaplow

No 4263, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Shifting successful plaintiffs' fees to defendants and increasing damage awards are alternative ways to achieve similar results: increasing plaintiffs' incentives to sue and raising defendants' expected payments. This paper shows that relying on higher damage awards is more efficient than shifting plaintiffs' fees. The reason is that fee-shifting is, perversely, more valuable for plaintiffs with higher litigation costs. Thus, it is possible to substitute higher damage awards for fee-shifting in a manner that leaves deterrence unaffected while eliminating the suits of plaintiffs with the highest litigation costs.

JEL-codes: K41 (search for similar items in EconPapers)
Date: 1993-01
Note: LE
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

Published as Rand Journal of Economics, vol 24, no. 4, pp. 625-630, (Winter 1993)

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