Economic Theory of Bellwether Trials

30 Pages Posted: 3 Feb 2011

See all articles by James Fallows Tierney

James Fallows Tierney

Chicago-Kent College of Law - Illinois Institute of Technology

Date Written: February 2, 2011

Abstract

This paper explores the informational benefits and costs of bellwether trials. It is the first to articulate and defend a theory of bellwether trials using a law-and-economics framework. While some scholars and practitioners have undertaken descriptive analysis of bellwether trials, or defended them on procedural-justice grounds, they have not accounted for an important attribute that is particularly amenable to economic analysis. Bellwether trials serve the valuable function of price signaling: providing data points for future settlement negotiations about the likelihood of success at trial, as well as the damages awards juries are willing to set for certain claims or types of injuries. Drawing from the law-and-economics literature on the selection of disputes for litigation, this paper explains that bellwether trials inform parties of the likelihood they will succeed on the merits of their claims. In so doing, these early trials channel "easy" cases (from either the plaintiff's or defendant’s perspective) away from litigation and toward settlement or dismissal.

JEL Classification: K13, K41

Suggested Citation

Tierney, James, Economic Theory of Bellwether Trials (February 2, 2011). Available at SSRN: https://ssrn.com/abstract=1754231 or http://dx.doi.org/10.2139/ssrn.1754231

James Tierney (Contact Author)

Chicago-Kent College of Law - Illinois Institute of Technology ( email )

565 W. Adams St.
Chicago, IL 60661-3691
United States

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