A Note on Private versus Social Incentives to Sue in a Costly Legal System

12 Pages Posted: 22 Feb 2013

See all articles by Peter S. Menell

Peter S. Menell

University of California, Berkeley - School of Law

Date Written: January 21, 1983

Abstract

This article presents a game-theoretic model of costly litigation. The model shows that where an injurer can calibrate the level of damages done to other parties, it sacrifices in profits an amount related to the victim's litigation costs by inducing suit. Thus the structure of the legal system implicitly internalizes the costs of litigation. Whether complete internalization occurs depends on such considerations as the information of the parties and the injurer's ability to control damages precisely.

Keywords: Incentives to Sue, American Rule, English Rule

JEL Classification: K41

Suggested Citation

Menell, Peter S., A Note on Private versus Social Incentives to Sue in a Costly Legal System (January 21, 1983). Journal of Legal Studies, Vol. 12, p. 41 1983. Available at SSRN: https://ssrn.com/abstract=2222388 or http://dx.doi.org/10.2139/ssrn.2222388

Peter S. Menell (Contact Author)

University of California, Berkeley - School of Law ( email )

215 Boalt Hall
Berkeley, CA 94720-7200
United States

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