Frivolous lawsuits refer to cases that are brought by plaintiffs with the only objective to extract settlement offers from defendants. Whereas a wide literature questions the credibility of frivolous litigation, this phenomenon had significant policy implications by inspiring several legal reform acts designed to deter meritless claims. Indeed, the issue of frivolous suits may be important from a welfare perspective since such claims may consume substantial resources (due to litigation costs, judicial congestion, etc.) and have negative distributive consequences (since a payment is made to a party who has no legal entitlement to recovery).
Many scholars and policy makers have expressed concerns about frivolous suits. However, despite this broad concern, there is no consensus about how a frivolous case should be defined (Bone 1997; Spier 2007). A first approach defines frivolous suits as negative expected value suits, i.e., claims in...
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