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The Litigious Plaintiff Hypothesis: Case Selection and Resolution

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Author Info
Theodore Eisenberg
Henry S. Farber

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Abstract

A central feature of the litigation process that affects case outcomes is the selection of cases for litigation. In this study, we present a theoretical framework for understanding the operation of this suit selection process and its relationship to the underlying distribution of potential claims and claimants. We implement the model empirically by assuming that individuals vary more in their litigiousness (inverse costs of litigation) than do corporations. This assumption, coupled with the case selection process we present, yields clear predictions on trial rates as a function of whether the plaintiff and defendant were individuals or corporations. The model also yields a prediction on the plaintiff's win rate in lawsuits as a function of the plaintiff's identity. Our empirical analysis, using data on over 200,000 federal civil litigations, yields results that are generally consistent with the theory. Lawsuits where the plaintiff is an individual are found to have higher trial rates and lower plaintiff win rates.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 5649.

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Date of creation: Jul 1996
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Handle: RePEc:nbr:nberwo:5649

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Find related papers by JEL classification:
K41 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Litigation Process

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Farber, Henry S & White, Michelle J, 1994. "A Comparison of Formal and Informal Dispute Resolution in Medical Malpractice," Journal of Legal Studies, University of Chicago Press, vol. 23(2), pages 777-806, June.
  2. Spier, Kathryn E, 1992. "The Dynamics of Pretrial Negotiation," Review of Economic Studies, Blackwell Publishing, vol. 59(1), pages 93-108, January. [Downloadable!] (restricted)
  3. Hylton, Keith N, 1993. "Asymmetric Information and the Selection of Disputes for Litigation," Journal of Legal Studies, University of Chicago Press, vol. 22(1), pages 187-210, January.
  4. Henry S. Farber & Harry C. Katz, 1979. "Interest arbitration, outcomes, and the incentive to bargain," Industrial and Labor Relations Review, ILR Review, ILR School, Cornell University, vol. 33(1), pages 55-63, October.
  5. Hay, Bruce L, 1995. "Effort, Information, Settlement, Trial," Journal of Legal Studies, University of Chicago Press, vol. 24(1), pages 29-62, January.
  6. Daughety, Adnrew F & Reinganum, Jennifer F, 1993. "Endogenous Sequencing in Models of Settlement and Litigation," Journal of Law, Economics and Organization, Oxford University Press, vol. 9(2), pages 314-48, October.
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  7. E.K. Berndt & B.H. Hall & R.E. Hall, 1974. "Estimation and Inference in Nonlinear Structural Models," NBER Chapters, in: Annals of Economic and Social Measurement, Volume 3, number 4, pages 103-116 National Bureau of Economic Research, Inc. [Downloadable!]
  8. Eisenberg, Theodore, 1990. "Testing the Selection Effect: A New Theoretical Framework with Empirical Tests," Journal of Legal Studies, University of Chicago Press, vol. 19(2), pages 337-58, June.
  9. Heckman, James J & Honore, Bo E, 1990. "The Empirical Content of the Roy Model," Econometrica, Econometric Society, vol. 58(5), pages 1121-49, September. [Downloadable!] (restricted)
  10. Henry S. Farber & Michelle J. White, 1991. "Medical Malpractice: An Empirical Examination of the Litigation Process," RAND Journal of Economics, The RAND Corporation, vol. 22(2), pages 199-217, Summer. [Downloadable!] (restricted)
  11. 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 1067-97, September. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Marco, Alan C., 2005. "Learning by Suing: Structural Estimates of Court Errors in Patent Litigation," Vassar College Department of Economics Working Paper Series 68, Vassar College Department of Economics. [Downloadable!]
  2. Jose Galdon-Sanchez & Maia Guell, 2000. "Let's go to court! Firing costs and dismissal conflicts," Working Papers 823, Princeton University, Department of Economics, Industrial Relations Section.. [Downloadable!]
  3. Kaplan, David S. & Sadka, Joyce, 2008. "Enforceability of labor law : evidence from a labor court in Mexico," Policy Research Working Paper Series 4483, The World Bank. [Downloadable!]
  4. Zhou, J., 2007. "In Litigation: How Far do the "Haves" Come Out Ahead?," Discussion Paper 2007-002, Tilburg University, Tilburg Law and Economic Center. [Downloadable!]
    Other versions:
  5. Howard F. Chang & Hilary Sigman, 1999. "Incentives to Settle Under Joint and Several Liability," NBER Working Papers 7096, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  6. Davis S. Kaplan & Joyce Sadka & Jorge Luis Silva-Mendez, 2006. "Litigation and Settlement: New Evidence from Labor Courts in Mexico," Working Papers 0606, Centro de Investigacion Economica, ITAM. [Downloadable!]
    Other versions:
  7. Daniel Hamermesh, 1973. "The Effect of Government Ownership on Union-Wages," Working Papers 418, Princeton University, Department of Economics, Industrial Relations Section.. [Downloadable!]
  8. Theodore Eisenberg & Henry S. Farber, 1999. "The Government As Litigant: Further Tests of the Case Selection Model," Working Papers 797, Princeton University, Department of Economics, Industrial Relations Section.. [Downloadable!]
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