IDEAS home Printed from https://ideas.repec.org/p/nbr/nberwo/3428.html
   My bibliography  Save this paper

Medical Malpractice: An Empirical Examination of the Litigation Process

Author

Listed:
  • Henry S. Farber
  • Michelle J. White

Abstract

New data on medical malpractice claims against a single hospital where a direct measure of the quality of medical care is available are used to address 1) the specific question of the role of the negligence rule in the dispute settlement process in medical malpractice, and 2) the general question of how the process of negotiation and dispute resolution in medical malpractice operates with regard to both the behavior of the parties and the outcome of the process. We find that the quality of medical care is an extremely important determinant of deferdants' medical malpractice liability. More generally, we find that the data are consistent with a model where 1) the plaintiff is not well informed ex ante about the likelinood of negligence and 2) the ex ante expected value to the plaintiff of a suit is high relative to the costs of filing a suit and getting more information. Thus, suits are filed even where there is no concrete reason to believe there has been negligence, and virtually all suits are either dropped or settled based on the information gained after filing. We conclude that the filing of suits that appear, ex post, to be nuisance suits can be rational eguilibrium behavior, ex ante, where there is incomplete information about care quality.

Suggested Citation

  • Henry S. Farber & Michelle J. White, 1990. "Medical Malpractice: An Empirical Examination of the Litigation Process," NBER Working Papers 3428, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:3428
    Note: LS
    as

    Download full text from publisher

    File URL: http://www.nber.org/papers/w3428.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Steven Shavell, 1989. "Sharing of Information Prior to Settlement or Litigation," RAND Journal of Economics, The RAND Corporation, vol. 20(2), pages 183-195, Summer.
    2. Vincent P. Crawford, 1982. "Compulsory Arbitration, Arbitral Risk and Negotiated Settlements: A Case Study in Bargaining under Imperfect Information," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 49(1), pages 69-82.
    3. Henry S. Farber & Harry C. Katz, 1979. "Interest Arbitration, Outcomes, and the Incentive to Bargain," ILR Review, Cornell University, ILR School, vol. 33(1), pages 55-63, October.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Terza, Joseph V. & Tsai, Wei-Der, 2006. "Censored Probit Estimation with Correlation near the Boundary: A Useful Reparameteriztion," Review of Applied Economics, Lincoln University, Department of Financial and Business Systems, vol. 2(1), pages 1-12.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Phillip A. Miller, 2000. "An Analysis of Final Offers Chosen in Baseball's Arbitration System," Journal of Sports Economics, , vol. 1(1), pages 39-55, February.
    2. Nathalie Chappe, 2001. "L'analyse économique d'un mode de résolution des litiges : l'arbitrage," Revue Française d'Économie, Programme National Persée, vol. 15(4), pages 187-208.
    3. Motta, Massimo & Polo, Michele, 2003. "Leniency programs and cartel prosecution," International Journal of Industrial Organization, Elsevier, vol. 21(3), pages 347-379, March.
    4. Giuseppe Dari-Mattiacci & Bruno Deffains, 2007. "Uncertainty of Law and the Legal Process," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 163(4), pages 627-656, December.
    5. Gregor Martin, 2015. "To Invite or Not to Invite a Lobby, That Is the Question," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 15(2), pages 143-166, July.
    6. Choné, Philippe & Linnemer, Laurent, 2010. "Optimal litigation strategies with observable case preparation," Games and Economic Behavior, Elsevier, vol. 70(2), pages 271-288, November.
    7. Gonzaga, Gustavo & Scandiuzzi, João Carlos, 1998. "How Does Government Wage Policy Affect Wage Bargaining in Brazil?," Brazilian Review of Econometrics, Sociedade Brasileira de Econometria - SBE, vol. 18(1), May.
    8. Jesse Bull, 2013. "Interrogation and Evidence Fabrication," Working Papers 1303, Florida International University, Department of Economics.
    9. Eran Hanany & D. Marc Kilgour & Yigal Gerchak, 2007. "Final-Offer Arbitration and Risk Aversion in Bargaining," Management Science, INFORMS, vol. 53(11), pages 1785-1792, November.
    10. Richard Boylan & Cheryl Xiaoning Long, 2000. "Size, Monitoring and Plea Rate: An Examination of United States Attorneys," Econometric Society World Congress 2000 Contributed Papers 0089, Econometric Society.
    11. Bradley R. Weinberg, 2020. "Third-Party Intervention and the Preservation of Bargaining Relationships," ILR Review, Cornell University, ILR School, vol. 73(2), pages 498-527, March.
    12. Bag, Parimal Kanti, 2003. "Unraveling in first-price auction," Games and Economic Behavior, Elsevier, vol. 43(2), pages 312-321, May.
    13. Bottom, William P., 1998. "Negotiator Risk: Sources of Uncertainty and the Impact of Reference Points on Negotiated Agreements," Organizational Behavior and Human Decision Processes, Elsevier, vol. 76(2), pages 89-112, November.
    14. Freeman, Richard B, 1986. "Unionism Comes to the Public Sector," Journal of Economic Literature, American Economic Association, vol. 24(1), pages 41-86, March.
    15. Andrew F. Daughety & Jennifer F. Reinganum, 1995. "Keeping Society in the Dark: On the Admissibility of Pretrial Negotiations as Evidence in Court," RAND Journal of Economics, The RAND Corporation, vol. 26(2), pages 203-221, Summer.
    16. Alan Speight & Dennis Thomas, 1997. "Arbitrator Decision‐Making in the Transfer Market: an Empirical Analysis," Scottish Journal of Political Economy, Scottish Economic Society, vol. 44(2), pages 198-215, May.
    17. Andrew Friedson & Thomas Kniesner, 2012. "Losers and losers: Some demographics of medical malpractice tort reforms," Journal of Risk and Uncertainty, Springer, vol. 45(2), pages 115-133, October.
    18. Éric Langlais, 2008. "Indemnisation des préjudices et fréquence des procès en présence d'une asymétrie d'information sur l'aversion au risque des parties," Recherches économiques de Louvain, De Boeck Université, vol. 74(2), pages 191-218.
    19. Inés Macho-Stadler & David Pérez-Castrillo, 2001. "Settlement in Tax Evasion Prosecution," UFAE and IAE Working Papers 495.01, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
    20. Philippe Choné & Saïd Souam & Arnold Vialfont, 2012. "Commitments in Antitrust," Working Papers hal-04141127, HAL.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:3428. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/nberrus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.