Litigation and Settlement under Court Error

Ackermann, Philipp (February 2010). Litigation and Settlement under Court Error (Discussion Papers 10-03). Bern: Department of Economics

[img]
Preview
Text
dp1003.pdf - Published Version
Available under License Creative Commons: Attribution (CC-BY).

Download (202kB) | Preview

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.

Item Type:

Working Paper

Division/Institute:

03 Faculty of Business, Economics and Social Sciences > Department of Economics

UniBE Contributor:

Ackermann, Philipp

Subjects:

300 Social sciences, sociology & anthropology > 330 Economics

Series:

Discussion Papers

Publisher:

Department of Economics

Language:

English

Submitter:

Lars Tschannen

Date Deposited:

08 Oct 2020 11:16

Last Modified:

08 Oct 2020 11:16

JEL Classification:

K13, K41

BORIS DOI:

10.7892/boris.145723

URI:

https://boris.unibe.ch/id/eprint/145723

Actions (login required)

Edit item Edit item
Provide Feedback