NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Negative Expected Value Suits

Lucian Arye Bebchuk

NBER Working Paper No. 6474
Issued in March 1998
NBER Program(s):   LE

When the cost of a suit exceeds the expected judgment, will a potential plaintiff be able to extract any amount in settlement from the defendant? If so, what is the source of the plaintiff's ability to extract a settlement? This essay discusses existing theories as to why (and when) plaintiffs with negative-expected-value (NEV) suits can extract a settlement amount from the defendant. Among the theories discussed are ones that focus on informational issues and ones that focus on the way in which the parties' litigation costs are expected to be distributed over time.

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Document Object Identifier (DOI): 10.3386/w6474

Published: The New Palgrave Dictionary of Economics and the Law (1998), pp. 551-554

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