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

48 Pages Posted: 26 Nov 2004

See all articles by Claudia M. Landeo

Claudia M. Landeo

University of Alberta - Department of Economics

Maxim Nikitin

Higher School of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: 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.

Keywords: Settlement, Bargaining, Litigation, Asymmetric Information

JEL Classification: K41, C70, D82

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: https://ssrn.com/abstract=587641 or http://dx.doi.org/10.2139/ssrn.587641

Claudia M. Landeo (Contact Author)

University of Alberta - Department of Economics ( email )

Henry Marshall Tory Building 7-25
Edmonton, Alberta T6G 2H4
Canada

HOME PAGE: http://sites.google.com/a/ualberta.ca/claudia-m-landeo-s-home-page/home

Maxim Nikitin

Higher School of Economics ( email )

ICEF
Pokrovskiy bulvar 11
Moscow, 109028
Russia

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