Citation

Rasmusen E. Int. Rev. Law Econ. 1995; 15(3): 323-345.

Copyright

(Copyright © 1995, Elsevier Publishing)

DOI

10.1016/0144-8188(95)00015-Z

PMID

unavailable

Abstract

If a potential tort plaintiff can predict that the court will overestimate damages, he is more likely to bring suit, but if the court is aware of this, it will adjust its awards accordingly. In general, court error implies that the court should moderate extreme awards whether they are high or low, because of regression towards the mean. Predictable error, however, tends to push the optimal adjustment downwards, and unpredictable error pushes it upwards, because of plaintiff selection and signaling, respectively. Errors of either kind can lead plaintiffs to bring meritless suits.