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An Analysis Of Bounded Rationality In Judicial Litigations The Case With Loss Disappointment Averse Plaintiffs

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  • Eric LANGLAIS

    (EconomiX CNRS and Paris Ouest Nanterre and Laboratoire d Economie Foresti re INRA AgroParisTech Nancy)

Abstract

For psychologists bounded rationality reflects the presence of cognitive dissonance and or inconsistency revealing that people use heuristics Tversky and Kahneman 1974 rather than sophisticated processes for the assessment of their beliefs Recent research analyzing litigations and pretrial negotiations also focused on boundedly rational litigants Bar Gill 2005 Farmer and Peccorino 2002 relying on a na ve modelling of the self serving bias Our paper in contrast introduces the case for disappointment averse litigants relying on the axiomatic of Gull 1991 We show that this leads to a richer analysis in comparative statics at the same time this proves to be disappointing for the purposes of public policies in favour of the access to justice recommendations are quite ambiguous

Suggested Citation

  • Eric LANGLAIS, 2010. "An Analysis Of Bounded Rationality In Judicial Litigations The Case With Loss Disappointment Averse Plaintiffs," Journal of Advanced Research in Law and Economics, ASERS Publishing, vol. 1(1), pages 42-50.
    • Handle: RePEc:srs:jarle0:v:1:y:2010:i:1:p:42-50
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    References listed on IDEAS

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    1. Linda Babcock & George Loewenstein, 1997. "Explaining Bargaining Impasse: The Role of Self-Serving Biases," Journal of Economic Perspectives, American Economic Association, vol. 11(1), pages 109-126, Winter.
    2. Ulrich Schmidt & Horst Zank, 2005. "What is Loss Aversion?," Journal of Risk and Uncertainty, Springer, vol. 30(2), pages 157-167, January.
    3. Jeffrey J. Rachlinski & Chris Guthrie & Andrew J. Wistrich, 2007. "Heuristics and Biases in Bankruptcy Judges," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 163(1), pages 167-186, March.
    4. Ichino, Andrea & Polo, Michele & Rettore, Enrico, 2003. "Are judges biased by labor market conditions?," European Economic Review, Elsevier, vol. 47(5), pages 913-944, October.
    5. Farmer, Amy & Pecorino, Paul, 2002. "Pretrial bargaining with self-serving bias and asymmetric information," Journal of Economic Behavior & Organization, Elsevier, vol. 48(2), pages 163-176, June.
    6. George L. Priest & Benjamin Klein, 1984. "The Selection of Disputes for Litigation," The Journal of Legal Studies, University of Chicago Press, vol. 13(1), pages 1-56, January.
    7. Grant, Simon & Kajii, Atsushi & Polak, Ben, 2001. "Different notions of disappointment aversion," Economics Letters, Elsevier, vol. 70(2), pages 203-208, February.
    8. Viscusi, W Kip, 2001. "Jurors, Judges, and the Mistreatment of Risk by the Courts," The Journal of Legal Studies, University of Chicago Press, vol. 30(1), pages 107-142, January.
    9. Lucian Arye Bebchuk, 1984. "Litigation and Settlement under Imperfect Information," RAND Journal of Economics, The RAND Corporation, vol. 15(3), pages 404-415, Autumn.
    10. Gul, Faruk, 1991. "A Theory of Disappointment Aversion," Econometrica, Econometric Society, vol. 59(3), pages 667-686, May.
    11. Farber, Henry S & Bazerman, Max H, 1987. "Why Is There Disagreement in Bargaining?," American Economic Review, American Economic Association, vol. 77(2), pages 347-352, May.
    12. Hausken, Kjell, 2005. "The battle of the sexes when the future is important," Economics Letters, Elsevier, vol. 87(1), pages 89-93, April.
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    Cited by:

    1. Cédric Argenton & Xiaoyu Wang, 2023. "Litigation and settlement under loss aversion," European Journal of Law and Economics, Springer, vol. 56(2), pages 369-402, October.

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    More about this item

    JEL classification:

    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • K13 - Law and Economics - - Basic Areas of Law - - - Tort Law and Product Liability; Forensic Economics
    • K41 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Litigation Process
    • K31 - Law and Economics - - Other Substantive Areas of Law - - - Labor Law
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games

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