Litigation and settlement under court error

Arbeitspapier

Settlements are often considered to be welfare-enhancing because they save time and litigation costs. In the presence of court error, however, this conclusion may be wrong. Court decisions create positive externalities for future litigants which will not occur if a dispute is settled out of court. Focusing on private litigation, we examine the impact of court error on the deterrent effect of the strict liability rule. In an asymmetric information setup both, underdeterrence and overdeterrence are possible under court error. Moreover, court error increases the likelihood of out-of-court settlements which can offset the positive externality of litigation.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Discussion Papers ; No. 10-03

Classification and Topics

• Classification: Wirtschaft ; Tort Law and Product Liability; Forensic Economics ; Litigation Process
• Subject: litigation ; settlement ; asymmetric information ; court error ; strict liability rule ; Rechtsprechung ; Zivilprozess ; Verhandlungen ; Asymmetrische Information ; Rechtsökonomik

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Ackermann, Philipp
• Event: Veröffentlichung
• (who): University of Bern, Department of Economics
• (where): Bern
• (when): 2010

Further information

• Handle: http://hdl.handle.net/10419/76772
• Last update: 10.03.2025, 11:43 AM CET