Negative Expected Value Suits

Bebchuk, Lucian A.

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Negative Expected Value Suits

NBER Working Paper No. w6474

10 Pages Posted: 21 Jul 2000 Last revised: 11 Sep 2022

See all articles by Lucian A. Bebchuk

Lucian A. Bebchuk

Harvard Law School; European Corporate Governance Institute (ECGI); National Bureau of Economic Research (NBER)

There are 2 versions of this paper

Date Written: March 1998

Abstract

When the cost of a suit exceeds the expected judgment, will a potential plaintiff be able to extract any amount in settlement from the defendant? If so, what is the source of the plaintiff's ability to extract a settlement? This essay discusses existing theories as to why (and when) plaintiffs with negative-expected-value (NEV) suits can extract a settlement amount from the defendant. Among the theories discussed are ones that focus on informational issues and ones that focus on the way in which the parties' litigation costs are expected to be distributed over time.

Suggested Citation: Suggested Citation

Bebchuk, Lucian A., Negative Expected Value Suits (March 1998). NBER Working Paper No. w6474, Available at SSRN: https://ssrn.com/abstract=226219