The Market in Unmatured Tort Claims: Twenty Years Later

Abstract:     
In 1989, Professor Robert Cooter argued for changes in the law that would facilitate the development of a market in unmatured tort claims. And yet it remains unadopted in all jurisdictions. There is a reason for this. In this paper I reexamine the proposal as to its likely intended and unintended effects. This article argues that, for such a market to work, three modifications must be made. First, the tort awards must be based on optimal-deterrence-damages rather than full-compensation damages. (The paper provides an explanation of full-compensation damages, optimal-deterrence damages, and optimal-insurance damages.) Second, potential tortfeasors must not be allowed to purchase the claims of their potential victims. Third, agreements between potential tortfeasors and the holders unmatured tort claims must be prohibited.

Number of Pages in PDF File: 28

Keywords: torts, tort claims, unmatured, unmatured tort claims, market in unmatured tort claims, damages, optimal deterrence, full compensation, optimal insurance, Cooter, economics, law and economics

JEL Classification: K0, K13

working papers series