Twenty-five years ago, in 1989, Professor Robert Cooter, writing in the Virginia Law Review, proposed changes in the law that would facilitate the development of a market in unmatured tort claims. On this twenty-fifth anniversary of this groundbreaking paper, it is fitting to reexamine this proposal, speculate on why it has not been adopted, and to explore whether revisions in the proposal might lead to greater legislative acceptance. In this paper I reexamine the proposal as to its likely intended and unintended effects. This article argues that, for such a market in unmatured tort claims to work, three modifications must be made. First, the tort awards must be based on optimal-deterrence-damages rather than full-compensation damages. (The paper provides an explanation of full-compensation damages, optimal-deterrence damages, and optimal-insurance damages.) Second, potential tortfeasors must not be allowed to purchase the claims of their potential victims. Third, agreements between potential tortfeasors and the holders unmatured tort claims must be prohibited.
- law and economics
Available at: http://works.bepress.com/stephen_marks/2/