Abstract

http://ssrn.com/abstract=1009211
 
 

References (21)



 


 



Mass Torts and the Incentives for Suit, Settlement, and Trial


Andrew F. Daughety


Vanderbilt University - College of Arts and Science - Department of Economics; Vanderbilt University - Law School

Jennifer F. Reinganum


Vanderbilt University - College of Arts and Science - Department of Economics; Vanderbilt University - Law School

August 2007


Abstract:     
We explore how the incentives of a plaintiff and her attorney, when considering filing suit and bargaining over settlement, can differ between those suits associated with stand-alone torts cases and those suits involving mass torts. We contrast "individual-based liability determination" (IBLD), wherein a clear description of the mechanism by which a defendant's actions translate into a plaintiff's harm is available, with "population-based liability determination" (PBLD), wherein cases rely upon the prevalence of harms in the population to persuade a judge or jury to draw an inference of causation or fault. We show that PBLD creates a positive externality for the plaintiff's side that is inherent in many mass tort settings; this externality induces an increased propensity to file suit, higher settlement demands and greater joint payoffs for plaintiffs and their attorneys. Consequently, the defendant in a PBLD case faces an increased ex ante expected cost compared with the IBLD regime, thereby increasing incentives to take care. However, PBLD need not always imply an increased likelihood of trial relative to IBLD for any filed case (though it may lead to more cases being filed); the heightened aggressiveness of the plaintiff and her attorney can actually lead to a reduction in the likelihood of trial. Thus, PBLD can be more, or less, efficient than IBLD (in the sense of reducing trial costs), when considering cases that would be filed in both possible regimes.

Number of Pages in PDF File: 48

Keywords: Liability determination, settlement bargaining

JEL Classification: K13, K41, D82

working papers series


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Date posted: August 25, 2007  

Suggested Citation

Daughety, Andrew F. and Reinganum, Jennifer F., Mass Torts and the Incentives for Suit, Settlement, and Trial (August 2007). Available at SSRN: http://ssrn.com/abstract=1009211 or http://dx.doi.org/10.2139/ssrn.1009211

Contact Information

Andrew F. Daughety (Contact Author)
Vanderbilt University - College of Arts and Science - Department of Economics ( email )
Box 1819 Station B
Nashville, TN 37235
United States
615-322-3453 (Phone)
615-343-8495 (Fax)
Vanderbilt University - Law School
131 21st Avenue South
Nashville, TN 37203-1181
United States
Jennifer F. Reinganum
Vanderbilt University - College of Arts and Science - Department of Economics ( email )
Box 1819 Station B
Nashville, TN 37235
United States
615-322-2937 (Phone)
615-343-8495 (Fax)
Vanderbilt University - Law School
131 21st Avenue South
Nashville, TN 37203-1181
United States
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