Decoupling Liability: Optimal Incentives for Care and Litigation / A. Mitchell Polinsky, Yeon-Koo Che.

Format:

Book

Author/Creator:

Polinsky, A. Mitchell.

Contributor:

National Bureau of Economic Research.

Che, Yeon-Koo.

Series:

Working Paper Series (National Bureau of Economic Research) no. w3634.

NBER working paper series no. w3634

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Decoupling Liability

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1991.

Summary:

A "decoupled" liability system is one in which the award to the plaintiff differs from the payment by the defendant. The optimal system of decoupling makes the defendant's payment as high as possible. Such a policy allows the award to the plaintiff to be lowered, thereby reducing the plaintiff's incentive to sue -- and hence litigation costs -- without sacrificing the defendant's incentive to exercise care. The optimal award to the plaintiff may be less than or greater than the optimal payment by the defendant. The possibility of an out-of-court settlement does not qualitatively affect these results. If the settlement can be monitored, it may be desirable to decouple it as well.

Notes:

Print version record

February 1991.