IDEAS home Printed from https://ideas.repec.org/a/hit/hitjec/v56y2015i1p21-33.html
   My bibliography  Save this article

Frivolous Suits In The Infinitely-Repeated Litigation Game With Uncertainty

Author

Listed:
  • KIM, ILJOONG
  • KIM, JAEHONG

Abstract

We explain why 'frivolous suits (FS)' occur particularly under complete information. Existing analyses such as the 'traditional' and the 'early-defense-cost' models are not fully robust in that they either drop the plaintiff's withdrawal option or rely on a restrictive assumption that the defendant loses immediately unless he early defends himself at high cost. We pursue a more generalized explanation. We offer an infinite-period litigation model with uncertainty which reflects the reality more consistently. We then show that FS can occur as a subgame perfect equilibrium since the defendant over the pre-trial stage may settle with FS to save future time and/or trial costs. We further demonstrate that FS can occur even under the British rule of fee shifting.

Suggested Citation

  • Kim, Iljoong & Kim, Jaehong, 2015. "Frivolous Suits In The Infinitely-Repeated Litigation Game With Uncertainty," Hitotsubashi Journal of Economics, Hitotsubashi University, vol. 56(1), pages 21-33, June.
    • Handle: RePEc:hit:hitjec:v:56:y:2015:i:1:p:21-33
    DOI: 10.15057/27196
    as

    Download full text from publisher

    File URL: https://hermes-ir.lib.hit-u.ac.jp/hermes/ir/re/27196/HJeco0560100210.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.15057/27196?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Bebchuk, Lucian Arye & Chang, Howard F, 1996. "An Analysis of Fee Shifting Based on the Margin of Victory: On Frivolous Suits, Meritorious Suits, and the Role of Rule 11," The Journal of Legal Studies, University of Chicago Press, vol. 25(2), pages 371-403, June.
    2. Rosenberg, D. & Shavell, S., 1985. "A model in which suits are brought for their nuisance value," International Review of Law and Economics, Elsevier, vol. 5(1), pages 3-13, June.
    3. Kaushik Basu, 2007. "Coercion, contract and the limits of the market," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 29(4), pages 559-579, December.
    4. Bebchuk, Lucian Arye, 1988. "Suing Solely to Extract a Settlement Offer," The Journal of Legal Studies, University of Chicago Press, vol. 17(2), pages 437-450, June.
    5. I.P.L. P'ng, 1983. "Strategic Behavior in Suit, Settlement, and Trial," Bell Journal of Economics, The RAND Corporation, vol. 14(2), pages 539-550, Autumn.
    6. Cooter, Robert D & Rubinfeld, Daniel L, 1989. "Economic Analysis of Legal Disputes and Their Resolution," Journal of Economic Literature, American Economic Association, vol. 27(3), pages 1067-1097, September.
    7. Rosenberg, David & Shavell, Steven, 2006. "A solution to the problem of nuisance suits: The option to have the court bar settlement," International Review of Law and Economics, Elsevier, vol. 26(1), pages 42-51, March.
    8. Bebchuk, Lucian Arye, 1996. "A New Theory Concerning the Credibility and Success of Threats to Sue," The Journal of Legal Studies, University of Chicago Press, vol. 25(1), pages 1-25, January.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. repec:hit:hitjcm:v:56:y:2015:i:1:p:21-33 is not listed on IDEAS
    2. Cedomir GLIGORIC & Milos PAVLOVIC & Jana CVIJIC RODIC & Sanja DONCIC & Nikola VUJANOVIC, 2023. "Some Aspects of Economic Analysis of Out-of-court Settlement in the Dispute of Negative Expected Value – Case of Republic of Serbia," Business & Management Compass, University of Economics Varna, issue 1, pages 80-95.
    3. Giuseppe Dari-Mattiacci & Bruno Deffains, 2007. "Uncertainty of Law and the Legal Process," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 163(4), pages 627-656, December.
    4. Dari-Mattiacci, Giuseppe & Saraceno, Margherita, 2020. "Fee shifting and accuracy in adjudication," International Review of Law and Economics, Elsevier, vol. 63(C).
    5. Lucian Arye Bebchuk, 1998. "Negative Expected Value Suits," NBER Working Papers 6474, National Bureau of Economic Research, Inc.
    6. Farmer Amy & Pecorino Paul, 2014. "Litigation with Default Judgments," Review of Law & Economics, De Gruyter, vol. 10(2), pages 1-20, July.
    7. Guha, Brishti, 2016. "Malicious litigation," International Review of Law and Economics, Elsevier, vol. 47(C), pages 24-32.
    8. Margherita Saraceno, 2018. "Justice: Greater Access, Lower Costs," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 4(2), pages 283-312, July.
    9. Daniela Marchesi, 2007. "The Rule Incentives that Rule Civil Justice," ISAE Working Papers 85, ISTAT - Italian National Institute of Statistics - (Rome, ITALY).
    10. Miceli, Thomas J. & Stone, Michael P., 2014. "“Piggyback” lawsuits and deterrence: Can frivolous litigation improve welfare?," International Review of Law and Economics, Elsevier, vol. 39(C), pages 49-57.
    11. Schaufele, Brandon, 2022. "Chilling Effects from Anti-SLAPP Laws," MPRA Paper 113740, University Library of Munich, Germany.
    12. Rasmusen, Eric, 1995. "Predictable and unpredictable error in tort awards: The effect of plaintiff self-selection and signaling," International Review of Law and Economics, Elsevier, vol. 15(3), pages 323-345, September.
    13. Eric Rasmusen, 1995. "``Predictable and Unpredictable Error in Tort Awards: The Effect of Plaintiff Self Selection and Signalling,''," Law and Economics 9506003, University Library of Munich, Germany.
    14. Pao-Li Chang, 2002. "The Evolution and Utilization of the GATT/WTO Dispute Settlement Mechanism," Working Papers 475, Research Seminar in International Economics, University of Michigan.
    15. Kirstein, Roland & Schmidtchen, Dieter, 1997. "Judicial detection skill and contractual compliance," International Review of Law and Economics, Elsevier, vol. 17(4), pages 509-520, December.
    16. Landeo, Claudia M. & Nikitin, Maxim, 2018. "Financially-constrained lawyers: An economic theory of legal disputes," Games and Economic Behavior, Elsevier, vol. 109(C), pages 625-647.
    17. Dari-Mattiacci, Giuseppe & Deffains, Bruno & Lovat, Bruno, 2011. "The dynamics of the legal system," Journal of Economic Behavior & Organization, Elsevier, vol. 79(1), pages 95-107.
    18. Farmer, Amy & Pecorino, Paul, 1998. "A reputation for being a nuisance: frivolous lawsuits and fee shifting in a repeated play game," International Review of Law and Economics, Elsevier, vol. 18(2), pages 147-157, June.
    19. Josh Lerner, 2010. "The Litigation of Financial Innovations," Journal of Law and Economics, University of Chicago Press, vol. 53(4), pages 807-831.
    20. Minkler, Lanse, 1999. "Legal institutions, environmental protection, and the willingness-to-accept measure of value," Ecological Economics, Elsevier, vol. 28(1), pages 99-116, January.
    21. Klement, Alon, 2003. "Threats to sue and cost divisibility under asymmetric information," International Review of Law and Economics, Elsevier, vol. 23(3), pages 261-272, September.

    More about this item

    Keywords

    frivolous suit; negative expected value suit; uncertainty; time cost; settlement; American rule; British rule;
    All these keywords.

    JEL classification:

    • K4 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior
    • H4 - Public Economics - - Publicly Provided Goods

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hit:hitjec:v:56:y:2015:i:1:p:21-33. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Digital Resources Section, Hitotsubashi University Library (email available below). General contact details of provider: https://edirc.repec.org/data/fehitjp.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.