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

Eric Rasmusen ()

Law and Economics from University Library of Munich, Germany

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.

JEL-codes: K (search for similar items in EconPapers)
Date: 1995-06-14
Note: A 79KB LaTeX file. A postscript file is available on request from Erasmuse@Indiana.edu.
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