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Split-Award Tort Reform, Firm's Level of Care, and Litigation Outcomes


Claudia M. Landeo


University of Alberta - Department of Economics

Maxim Nikitin


Higher School of Economics
March 16, 2005


Abstract:     
We investigate the effect of the split-award tort reform, where the state takes a share of the plaintiff's punitive damage award, on the firm's level of care, the likelihood of trial and the social costs of accidents. A decrease in the plaintiff's share of the punitive damage award reduces the firm's level of care and therefore, increases the probability of accidents. The effects of split-awards on the likelihood of trial and social costs of accidents are ambiguous. Conditions under which a decrease in the plaintiff's share of the punitive damage award reduces the probability of trial and the social cost of accidents are derived.

Number of Pages in PDF File: 48

Keywords: Settlement, Bargaining, Litigation, Asymmetric Information

JEL Classification: K41, C70, D82

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Date posted: November 26, 2004  

Suggested Citation

Landeo, Claudia M. and Nikitin, Maxim, Split-Award Tort Reform, Firm's Level of Care, and Litigation Outcomes (March 16, 2005). Available at SSRN: http://ssrn.com/abstract=587641 or http://dx.doi.org/10.2139/ssrn.587641

Contact Information

Claudia M. Landeo (Contact Author)
University of Alberta - Department of Economics ( email )
Edmonton, Alberta T6G 2H4
Canada
HOME PAGE: http://www.arts.ualberta.ca/~econweb/landeo/
Maxim Nikitin
Higher School of Economics ( email )
ICEF
Pokrovskiy bulvar 11
Moscow, 109028
Russia
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