Litigation Expenditures Under Alternative Liability Rules

Abstract

For a long time there was a widespread consensus in the literature that a comparative negligence standard imposes higher administrative costs than a simple negligence standard and a contributory negligence standard. However, in a setting where the parties can choose their level of litigation expenditures and the litigation expenditures influence the outcome of the case, it can be shown that none of the negligence rules unambiguously leads to higher expenditures. Which rule creates larger expenditures strongly depends on the quality of the case (taking into account both the defendant’s negligence and the plaintiff’s negligence).