Optimal Use of Information in Litigation: Should Regulatory Information Be Withheld to Deter Frivolous Suits?

Abstract

We examine the value of incorporating regulatory information into the court liability decision and making it publicly available when the causality of harm is uncertain. Public access to regulatory information, coupled with its use in a liability decision, not only improves the accuracy of court adjudication but also guides victims to more informed decisions about their lawsuits, when victims' private information on causality of harm is verifiable to the court. When victims' information is unverifiable, however, withholding regulatory information until after victims bring lawsuits induces them to utilize their private information better in their litigation decisions.