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The Incentive to Take Care and the Deterrence of a Nuisance Suit
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- Authors
- Issue Date
- 2002-01
- Citation
- Seoul Journal of Economics, Vol.15 No.1, pp. 55-78
- Keywords
- incentive to take care ; Nuisance suits ; Litigation ; Informational Asymmetry
- Abstract
- This paper investigates three important issues in law and economics: the incentive to take care in the presence of nuisance suits, the incentive to bring about a nuisance suit by a plaintiff, and how to resolve a legal dispute. For this, we consider a three-stage game between a plaintiff and a defendant. We identity two types of equilibria one of which prevails, depending on the parameter values. The main results show that: generally the equilibrium level of care differs from the socially optimal care level; nuisance suits are not fully deterred; in some cases, litigation cannot be avoided because of the informational asymmetry.
- ISSN
- 1225-0279
- Language
- English
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