The Evolution and Persistence of Optimism in Litigation
AbstractEmpirical evidence suggests that lawyers and litigants are systematically optimistic with respect to the outcome at trial. Using evolutionary game theory, this article seeks to provide a theoretical explanation for the persistence of the optimism bias. The adaptive force of optimism derives from its function as a commitment device in the pretrial bargaining stage. Optimistic lawyers, by credibly threatening to resort to costly litigation, succeed in extracting more favorable settlements. Therefore, market-selection forces and cultural transmission dynamics dictate an equilibrium with a positive level of optimism. Understanding the dynamics leading to optimism provides new insight regarding the different factors that influence the level of this cognitive bias. In particular, it is shown that the design of legal rules affects the equilibrium level of optimism, which in turn affects the relative efficiency of the different legal designs. Methodologically, by enabling a more systematic exploration of the perception-shaping role of the law, this article seeks to expand the conventional boundaries of behavioral law and economics. Copyright 2006, Oxford University Press.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Oxford University Press in its journal The Journal of Law, Economics, and Organization.
Volume (Year): 22 (2006)
Issue (Month): 2 (October)
Contact details of provider:
Postal: Oxford University Press, Great Clarendon Street, Oxford OX2 6DP, UK
Fax: 01865 267 985
Web page: http://jleo.oupjournals.org/
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- J.J. Prescott & Kathryn E. Spier & Albert Yoon, 2014. "Trial and Settlement: A Study of High-Low Agreements," NBER Working Papers 19873, National Bureau of Economic Research, Inc.
- Deffains, Bruno & Langlais, Eric, 2008.
"Legal Interpretative Process and Litigants’ Cognitive Biases,"
14370, University Library of Munich, Germany.
- Bruno Deffains & Eric Langlais, 2009. "Legal Interpretative Process and Litigants’Cognitive Biases," EconomiX Working Papers 2009-8, University of Paris West - Nanterre la Défense, EconomiX.
- Dari-Mattiacci, Giuseppe & Deffains, Bruno & Lovat, Bruno, 2011.
"The dynamics of the legal system,"
Journal of Economic Behavior & Organization,
Elsevier, vol. 79(1-2), pages 95-107, June.
- Alexander Stremitzer, 2008.
"Plaintiffs exploiting Plaintiffs,"
Bonn Econ Discussion Papers
bgse2_2008, University of Bonn, Germany.
- Stremitzer, Alexander, 2008. "Plaintiffs exploiting Plaintiffs," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 224, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Oxford University Press) or (Christopher F. Baum).
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 references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link 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 profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.