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http://hdl.handle.net/1942/28095
Title: | The Optimal Adjustment to Liability When Litigation is Costly:A Note | Authors: | DE MOT, Jef Miceli, Thomas J. |
Issue Date: | 2019 | Source: | International review of law and economics, 58 (2019), p. 127-131 | Abstract: | We show that the optimal liability award with variable litigation costs may be either larger or smaller than the sum of the victim’s harm and litigation costs. The reason is that there are two countervailing effects at play. On the one hand, larger damage awards lead to increased litigation expenditures, which have a dampening effect on optimal damages. On the other hand, variable litigation costs only make sense if the parties anticipate a gain from expending litigation effort, which necessarily translates into a probability of plaintiff victory that is less than one. Consequently, the deterrence function of the trial is mitigated, justifying an upward adjustment in the optimal damage award. The optimal adjustment balances these two effects. | Notes: | Miceli, TJ (reprint author), Show less Univ Connecticut, Dept Econ, Storrs, CT 06269 USA. jdemot@yahoo.com; Thomas.miceli@uconn.edu | Keywords: | Optimal damages; Costly litigation; Rent seeking | Document URI: | http://hdl.handle.net/1942/28095 | ISSN: | 0144-8188 | e-ISSN: | 1873-6394 | DOI: | 10.1016/j.irle.2019.03.008 | ISI #: | 000474321000013 | Category: | A1 | Type: | Journal Contribution | Validations: | ecoom 2020 |
Appears in Collections: | Research publications |
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File | Description | Size | Format | |
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Liability adjustment note_Rev_March29_2019 (1) (1).pdf | Peer-reviewed author version | 286.55 kB | Adobe PDF | View/Open |
1-s2.0-S0144818818302904-main.pdf Restricted Access | Published version | 500.96 kB | Adobe PDF | View/Open Request a copy |
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