Abstract

http://ssrn.com/abstract=556163
 
 

References (25)



 
 

Citations (7)



 


 



Information and Externalities in Sequential Litigation


Xinyu Hua


Northwestern University - Kellogg School of Management

Kathryn E. Spier


Harvard University - Law School - Faculty; National Bureau of Economic Research (NBER)

May 11, 2004


Abstract:     
The information that is created and disseminated through the litigation process can have social value. When economic agents learn about risks, they can fine-tune their future behaviors to mitigate these risks. Specifically, suppose that an injured plaintiff sues a defendant for damages sustained in an accident. In the future, the plaintiff may be harmed in similar accidents involving different defendants. The first lawsuit creates valuable information that the future defendants can use to fine-tune their investments in accident prevention. If the plaintiff and the first defendant are symmetrically uninformed about the true damages, their private incentive to litigate the first case is too small. If the plaintiff and the first defendant are asymmetrically informed, then the incentive to litigate the first case may be too large. The optimal liability rule trades off the need to provide defendants with incentives to take precautions and to provide the plaintiff with incentives to create valuable public information through litigation.

Number of Pages in PDF File: 28

Keywords: Litigation, Settlement, Externalities, Information, Liability, Incentives

JEL Classification: K00, K13, K41, D83

working papers series





Download This Paper

Date posted: June 14, 2004  

Suggested Citation

Hua, Xinyu and Spier, Kathryn E., Information and Externalities in Sequential Litigation (May 11, 2004). Available at SSRN: http://ssrn.com/abstract=556163 or http://dx.doi.org/10.2139/ssrn.556163

Contact Information

Xinyu Hua
Northwestern University - Kellogg School of Management ( email )
2001 Sheridan Road
Evanston, IL 60208
United States
Kathryn E. Spier (Contact Author)
Harvard University - Law School - Faculty ( email )
1575 Massachusetts
Hauser 302
Cambridge, MA 02138
United States
(617) 496-0019 (Phone)
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Feedback to SSRN


Paper statistics
Abstract Views: 1,384
Downloads: 99
Download Rank: 139,780
References:  25
Citations:  7

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo6 in 0.360 seconds