Journal of Risk and Uncertainty

, Volume 4, Issue 4, pp 403–423 | Cite as

Uncertainty, information and resolution of medical malpractice disputes

  • Frank A. Sloan
  • Thomas J. Hoerger
Insurance Liability Symposium—Part I


This study assesses the role of defendant liability in determining whether the plaintiff receives payment, relationship of compensation to economic loss, and stage of dispute resolution. An options pricing model explains how information acquired affects both decisions to drop or continue and settlement values, as well as the role of pecuniary motives for claiming. Cases in which a panel of physician evaluators thought defendant(s) to be innocent were much more likely to be dropped, as were cases in which innocence became more apparent as the case developed. Compensation was much less than economic loss on average. Questionable defendant liability meant reduced compensation.

Key words

options pricing model stage of dispute resolution compensation liability 


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Copyright information

© Kluwer Academic Publishers 1991

Authors and Affiliations

  • Frank A. Sloan
    • 1
  • Thomas J. Hoerger
    • 2
  1. 1.Department of EconomicsVanderbilt UniversityNashville
  2. 2.Vanderbilt UniversityNashville

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