judge put it, it permits defendants to adopt a “Ulysses-tied-to-the-mast arrangement that enables them to convincingly stiff opt-outs who demand
This has social welfare implications because it leads to
trials and litigation that would have been avoided absent the commitment
Finally, reduced net liability on the part of the defendant
may inefficiently reduce incentives to avoid wrongdoing.
Thus far, the chapter has analyzed Bayer’s strategy exclusively as a form of commitment strategy in order to understand the incentives that Bayer might have had for adopting the degree of transparency that it
Bayer’s actions purely as an economic strategy is several attractive features of the strategy that
issues that are connected with transparency.
First is the sense that that its product caused.
Bayer took some responsibility for the The bare existence of a schedule suggests
some acknowledgement on the part of Bayer.
In ordinary life, one does
not announce the existence of a protests one’s moral obligation
schedule to pay.
of payments while one loudly The public existence of even
nonpublic schedule conveys the social meaning of acknowledging some
This is true even though a formal apology or
acceptance of responsibility were not usually part of the settlement
40 In re Vitamins Antitrust Litigation, 215 F.3d at 30(Williams, J.)(Dist. D.C. ) Similarly, another judge critical of MFN agreements argued, “Because plaintiffs are ‘straight-jacketed’ by the most favored nations agreements with certain prior settling defendants, the strong public policies favoring complete settlement … are being frustrated.” In Re Chicken Antitrust Litigation, 560 F. Supp. 943 (Dist. Ga. 1979).
Any liability (under either a strict liability or a negligence
regime) will provide incentives undertaking safety precautions. incentives will exist up to the
to minimize future payouts by Under a negligence regime, the point of where the defendant will
have incentives to marginal liability
Under a strict liability
“purchase” safety up costs equal the cost
regime, the defendant will the point where the decreased the safety precautions. Under
either type of Shavell, 1987.