A Simple Proposal to Halve Litigation Costs
20 Pages Posted: 25 May 2005
Date Written: April 2005
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: Suggested Citation