Litigation,liability, and incentives for care

In this paper, potential injurers are subject to a negligence standard and differ in cost of taking care; in the event of accident, the injurer's degree of care is private information in litigation that follows. Award of damages for pain and suffering will lead to a general increase in care and hence reduce the likehood of accident. A tighter negligence standard will lead some potential injurers to take more care and others to take less. Adoption of a rule under which the loser at trial must pay the litigation costs of the winner will reduce the pressure for punitive damages.