A Simple Proposal to Halve Litigation Costs

20 Pages Posted: 25 May 2005

See all articles by David Rosenberg

David Rosenberg

Harvard Law School

Steven Shavell

Harvard Law School; National Bureau of Economic Research (NBER)

Date Written: April 2005

Abstract

This article discusses a simple proposal that could reduce litigation costs in the country by about half, yet without compromising the functioning of the liability system in a significant way. Under the proposal (1) only half the cases brought before a court would be randomly chosen for litigation, and (2) damages would be doubled in cases accepted for litigation. The first element of the proposal saves litigation costs and the second preserves deterrence of undesirable behavior. The effect of the proposal on settlement is emphasized, one important implication of which is that settlement is likely to occur before cases are filed (and possibly randomly eliminated), in which event plaintiffs will definitely be compensated.

JEL Classification: H00, K4, K41

Suggested Citation

Rosenberg, Michael and Shavell, Steven, A Simple Proposal to Halve Litigation Costs (April 2005). Harvard Law and Economics Discussion Paper No. 513. Available at SSRN: https://ssrn.com/abstract=729444 or http://dx.doi.org/10.2139/ssrn.729444

Michael Rosenberg

Harvard Law School ( email )

1575 Massachusetts
Hauser 406
Cambridge, MA 02138
United States
617-496-4558 (Phone)
617-495-1110 (Fax)

Steven Shavell (Contact Author)

Harvard Law School ( email )

1575 Massachusetts
Hauser 406
Cambridge, MA 02138
United States
617-495-3668 (Phone)
617-496-2256 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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