A Note on the Social versus Private Value of Suits when Care is Bilateral

Abstract

This paper re-examines the social versus private value of lawsuits when both injurers and victims can take care. The basic conclusions of that literature remain valid in this context: the private and social values generally differ, and there is no necessary relationship between them, meaning that there may be either too many or too few suits. Introducing the possibility of victim care does, however, alter the calculation of the deterrent effect of lawsuits. In particular, because allowing suits tends to reduce the incentives for victims to invest in precaution, the social value of prohibiting suits increases in direct relation to the productivity of victim care in lowering accident risk.Journal of Economic Literature Classification: K13, K40, K41

Have US Legislatures Fully Considered Causal Factors in Assigning Liability for Inherent Risk Accidents?

“…Turning to participants, the possibility of not being compensated for damage losses often causes participants to take action to reduce losses (Miceli, 2008). Participants who file lawsuits due to providers not coming forth with compensation for injuries have to absorb the costs of the lawsuit, which are deducted from damage awards received by successful plaintiffs.…”