Twenty-five years ago I posted a short essay, on which I commented ten years later. Let me now elaborate on an improved variation of that same idea. Imagine you came out from the grocery store to find a scratch on the side of your car door, a scratch that matches the position of the door on the car next to yours. You estimate they’ve done you $100 of damage. But in our world today this is where the story ends, as it would usually be crazy to spend thousands on a lawyer to sue them for such a small amount. So law today does little to discourage such harms. People can sloppily scratch car doors without fearing that they will have to pay damages.
It depends how encompassing such proscriptions are. If these religions also prohibit risky transactions in general (like stock trading, angel investments) it would be difficult but usually not everything that has a risk/chance is treated as gambling. I see this as a probabilistic market clearing mechanism that doesn't necessarily need to count as gambling.
I happen to believe that state-run lotteries are immoral and should not be offered.
I also think that the change in not merely having to consider the justice of one's claim but also complex mathematical formulae will change the way the decision is made to sue in a way that will disparately hurt the less-privileged.
People buy lottery tickets today, and they are not the smartest among us. And the goal is to improve on the status quo; we don't need everyone to participate to achieve that goal.
Simply put, you're suggesting an approach that involves an awful lot of math anc calculation. For people who are less than numerate, they may be unwilling to engage in the process, thus creating a systematic barrier against the less-educated for achieving justice.
Let's define a frivolous lawsuit as one where the expected outcome for the plaintiff is negative if it goes to court (more likely that the countersuit wins than the original suit). A slightly frivolous suit has slightly worse than even odds (say 49% chance the plaintiff wins, 51% chance the countersuit wins).
A significant fraction of the US population regularly plays state lotteries, which have negative expected return. Apparently, such "lottery players" would knowingly choose to file slightly frivolous suits, because they like lottery-like odds. Having a lot of people wanting to file frivolous suits is bad.
Another significant fraction of the US population chooses to invest some of their wealth in lower volatility assets like cash or bonds, even though they know they could get a higher expected return in something riskier like stocks. Apparently such "conservative investors" would prefer not to have a slightly frivolous suit filed against them, even though it is expected positive return. Indeed, they may prefer to settle a slightly frivolous suit for a lower payment, to reduce their risk. That makes the situation even worse, because now filing frivolous suits against conservative investors may be positive expected return (including both the probability of settlement and the trial outcome).
The high level point -- pretending people's preferences depend only on the expected outcome is silly.
"Right now a rich person doesn't have a mechanism to burn $100 of their dollars for $100 of a poor person's dollars."
Uh, that's exactly what the ability to sue people is. You force them to give in or pay for lawyers like you are paying for lawyers.
Who said that "a majority of Americans" would be unable to pay a $400 emergency expense?
What I said was that "many" Americans, by their own admission in a survey, would be unable (or perhaps simply unwilling) to pay. Not a majority, but a sizable fraction.
Besides, you correctly note that "the average amount of total savings is >$1,000 for every age category." Even the poorest category -- Gen Z workers living "paycheck to paycheck with difficulty" have roughly $1150 in average savings -- but this, being an average, of course implies that many respondents have less than that. And, accordingly, 58.6% of them claim that they would be unable to pay that $400 expensive. The rest claim that they would find a way.
The exact level of poverty in certain segments of American society is beside the point. The point is, if complainants/respondents necessarily need to throw money into a lottery just to have their cases heard -- and especially if those cases won't be heard 9 times out of 10, or 999 times out of 1000, in any event -- many Americans simply won't be able to utilize the courts at all, and the most disadvantaged will be the hardest hit. On the whole, Americans will have even less access to justice than they have today, which is little enough.
Look at the graphs on pages 8, 11, and 12-13 of the PDF you linked.
Of people living "paycheque to paycheque with difficulty" (a more strapped subcategory separated out from the "majority" who "live paycheque to paycheque"), the average amount of total savings is >$1,000 for every age category.
Add in credit cards, home equity loans, and other forms of lending, and it's clearly wrong to say that a majority of Americans would be "unable to pay" a $400 expense.
Here's a fun flaw in this plan: many religions have proscriptions against gambling. Forcing someone to engage in this form of dispute resolution could therefore be construed as a violation of their first amendment right to freedom of religion.
If they pick one in one trillion odds, the lawsuit will only happen one time in one trillion, so it is a pure forced mutual money transfer to the state.
If there is an odds cap, they can still leverage that odds cap to produce poorer outcomes for poor people than the status quo. Right now a rich person doesn't have a mechanism to burn $100 of their dollars for $100 of a poor person's dollars. The legal system would require them to hire a lawyer (thousands of dollars) to burn the poor person's time (not dollars). Introducing such a $ for $ mechanism on small scales could easily be welfare reducing.
This is already a concept in many states. A person who is sued can file an offer of judgment and, if accepted, the matter is resolved. If not accepted and the plaintiff obtains less that the offer of judgment, he has to pay the defendant's attorneys' fees for his trouble. In the alternative, the plaintiff can submit an offer judgment as a counter and if plaintiff gets more than the amount the defendant must pay the plaintiffs' attorneys' fees. In this way, the cost of bringing the claim in court is shifted to the party who "bets" wrong on the outcome.
That said, I'm not sure that engaging the legal machinery of a state for a claim of $100 (or under a certain threshold) is worth the effort. What that threshold is can certainly be debated, but a $100 scratch on a vehicle is just the cost of living in a free society. Not every wrong needs to be righted by the law.
At this level of "harm" it is social norms and culture that control. If someone caused a $100 scratch on a vehicle, then they should own up to it and pay. Unfortunately, we have eroded social norms like this with the expectation that a "law" will control. It will not.
If they claim a crazy high amount of damages when suiting you, then if the court rules that to be crazy high, then you get paid that crazy high amount!
Ordinary lawsuits already give an advantage to the side willing to spend more on lawyers.
You can combine loser pays with my proposal. I don't see how my proposal assumes that the accused is guilty any more than does our usual system for large harm lawsuits.
I don't see this as solving anything. Your process begins by assuming that your assertion that a particular other guy did the damage deserves to be assumed just as likely as his denial, which is absurd. Then it goes on to encourage more filing of suits over frivolous claims than we have now. This is a worse situation than the present "lawsuit lottery," where all you have to do to get rich is find a jury stupid enough to believe that Toyotas accelerate by themselves or Roundup causes cancer.
A more productive solution, I think, is to enact a loser-pays rule, preferably in the constitution so it can never be changed. Then you have an incentive to do the investigation needed to find the real culprit, which begins with you asking the grocery store for its camera footage for that day so you can look at it and track down the real perp.
Issue 1: You need a lower-bound cap on the "chance" each person can submit. Otherwise someone could enter "1 in one trillion" and then use this as a mechanism to force someone else to match them $ for $ always.
Issue 2: Even with a cap (say of the odds needed to get to $100,000), this is still a very easy mechanism for richer person to harass a less rich person. If Person A knows that Person B has 10x lower income, Person A can set damage amounts at amounts that are trivial for Person A and prohibitive for Person B with low risk. Many people would be significantly impacted by a loss of $1,000 and a 1 in 100 chance is a low chance of going to court.
Issue 2 means that it's actually unclear if this system makes the world a better place for societies with moderate to high inequality (like the US). The core issue you're trying to compensate for is that the legal system is cripplingly slow and expensive, and this is an imperfect remedy for that.
I don't see why one needs to understand game theory any better in this different world than in ours.