Incentives for Care, Litigation, and Tort Reform under Self-Serving Bias

@inproceedings{Landeo2012IncentivesFC,
  title={Incentives for Care, Litigation, and Tort Reform under Self-Serving Bias},
  author={Claudia M. Landeo and Maxim Nikitin and Sergei Izmalkov},
  year={2012}
}
This chapter presents a strategic model of incentives for care and litigation under asymmetric information and self-serving bias, and studies the effects of damage caps. Our main findings are as follows. First, our results suggest that the defendant's bias decreases his expenditures on accident prevention, and hence, increases the likelihood of accidents. Second, both litigants' biases increase the likelihood of disputes. Third, our results indicate that, although self-serving bias help… CONTINUE READING

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