Split-Award Tort Reform, Firm's Level of Care, and Litigation Outcomes
Claudia M. Landeo
University of Alberta - Department of Economics
Higher School of Economics
March 16, 2005
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, D82working papers series
Date posted: November 26, 2004
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