IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/1150.html
   My bibliography  Save this paper

Indemnisation des préjudices et fréquence des procès en présence d'une asymétrie d'informaion sur l'aversion au risque des parties
[Compensation of damages and frequency of trials with asymmetric information on preferences of litigant parties]

Author

Listed:
  • Langlais, Eric

Abstract

The paper addresses the issue of the impact of asymmetric information on risk aversion of litigant parties in a model à la Bebchuk. First we study the case where the plaintif is the informed party, and characterize the equilibrium with and without a pretrial negociation round. Then, we focuse on the comparative statics of the model and analyse the role of the choice of a cost allocation rule. Finally, we discuss several extensions: the case where the defendant is the informed party, the influence of the assumption on the representation of preferences, and the role of self-serving bias.

Suggested Citation

  • Langlais, Eric, 2005. "Indemnisation des préjudices et fréquence des procès en présence d'une asymétrie d'informaion sur l'aversion au risque des parties [Compensation of damages and frequency of trials with asymmetric i," MPRA Paper 1150, University Library of Munich, Germany, revised 06 Nov 2006.
    • Handle: RePEc:pra:mprapa:1150
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/1150/1/MPRA_paper_1150.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    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. Yaari, Menahem E, 1987. "The Dual Theory of Choice under Risk," Econometrica, Econometric Society, vol. 55(1), pages 95-115, January.
    3. Steven Shavell, 1989. "Sharing of Information Prior to Settlement or Litigation," RAND Journal of Economics, The RAND Corporation, vol. 20(2), pages 183-195, Summer.
    4. Roell, Ailsa A, 1987. "Risk Aversion in Quiggin and Yaari's Rank-Order Model of Choice under Uncertainty," Economic Journal, Royal Economic Society, vol. 97(388a), pages 143-159, Supplemen.
    5. W. Kip Viscusi, 1995. "Insurance and catastrophes: The changing role of the liability system," The Geneva Risk and Insurance Review, Palgrave Macmillan;International Association for the Study of Insurance Economics (The Geneva Association), vol. 20(2), pages 177-184, December.
    6. Kaplow, Louis & Shavell, Steven, 2000. "Should Legal Rules Favor the Poor? Clarifying the Role of Legal Rules and the Income Tax in Redistributing Income," The Journal of Legal Studies, University of Chicago Press, vol. 29(2), pages 821-835, June.
    7. Farmer, Amy & Pecorino, Paul, 2004. "Pretrial settlement with fairness," Journal of Economic Behavior & Organization, Elsevier, vol. 54(3), pages 287-296, July.
    8. 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.
    9. 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.
    10. Farmer, Amy & Pecorino, Paul, 1994. "Pretrial negotiations with asymmetric information on risk preferences," International Review of Law and Economics, Elsevier, vol. 14(3), pages 273-281, September.
    11. Jennifer F. Reinganum & Louise L. Wilde, 1986. "Settlement, Litigation, and the Allocation of Litigation Costs," RAND Journal of Economics, The RAND Corporation, vol. 17(4), pages 557-566, Winter.
    12. Daughety, Andrew F. & Reinganum, Jennifer F., 1994. "Settlement negotiations with two-sided asymmetric information: Model duality, information distribution, and efficiency," International Review of Law and Economics, Elsevier, vol. 14(3), pages 283-298, September.
    13. Louis Kaplow, 1993. "Shifting Plaintiffs' Fees versus Increasing Damage Awards," RAND Journal of Economics, The RAND Corporation, vol. 24(4), pages 625-630, Winter.
    14. Lucian Arye Bebchuk, 1984. "Litigation and Settlement under Imperfect Information," RAND Journal of Economics, The RAND Corporation, vol. 15(3), pages 404-415, Autumn.
    15. Kaplow, Louis & Shavell, Steven, 1994. "Why the Legal System Is Less Efficient Than the Income Tax in Redistributing Income," The Journal of Legal Studies, University of Chicago Press, vol. 23(2), pages 667-681, June.
    16. Che, Yeon-Koo & Yi, Jong Goo, 1993. "The Role of Precedents in Repeated Litigation," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 9(2), pages 399-424, October.
    17. Tversky, Amos & Wakker, Peter, 1995. "Risk Attitudes and Decision Weights," Econometrica, Econometric Society, vol. 63(6), pages 1255-1280, November.
    18. Weber, Elke U & Kirsner, Britt, 1997. "Reasons for Rank-Dependent Utility Evaluation," Journal of Risk and Uncertainty, Springer, vol. 14(1), pages 41-61, January.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Johanna Etner & Meglena Jeleva, 2013. "Risk Perception, Prevention And Diagnostic Tests," Health Economics, John Wiley & Sons, Ltd., vol. 22(2), pages 144-156, February.

    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. Deffains, Bruno & Langlais, Eric, 2008. "Legal Interpretative Process and Litigants’ Cognitive Biases," MPRA Paper 14370, University Library of Munich, Germany.
    2. Chopard, Bertrand & Cortade, Thomas & Langlais, Eric, 2010. "Trial and settlement negotiations between asymmetrically skilled parties," International Review of Law and Economics, Elsevier, vol. 30(1), pages 18-27, March.
    3. Langlais, Eric, 2008. "Cognitive dissonance, risk aversion and the pretrial negotiation impasse," MPRA Paper 8844, University Library of Munich, Germany.
    4. Eric Langlais, 2008. "Asymmetric information, self-serving bias and the pretrial negotiation impasse," Working Papers hal-04140725, HAL.
    5. Eric Langlais, 2008. "Asymmetric information, self-serving bias and the pretrial negotiation impasse," EconomiX Working Papers 2008-30, University of Paris Nanterre, EconomiX.
    6. Bruno Deffains & Eric Langlais, 2009. "Legal Interpretative Process and Litigants’ Cognitive Biases," Working Papers hal-04140887, HAL.
    7. Osborne, Evan, 1999. "Who should be worried about asymmetric information in litigation?," International Review of Law and Economics, Elsevier, vol. 19(3), pages 399-409, September.
    8. Langlais, Eric, 2010. "Safety and the Allocation of Costs in Large Accidents," MPRA Paper 25710, University Library of Munich, Germany.
    9. Eric Langlais, 2008. "Le "risque judiciaire" et les licenciements en France: le point de vue de l’économie du risque," Working Papers hal-04140724, HAL.
    10. 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.
    11. Farmer, Amy & Pecorino, Paul, 2004. "Pretrial settlement with fairness," Journal of Economic Behavior & Organization, Elsevier, vol. 54(3), pages 287-296, July.
    12. 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.
    13. Heyes, Anthony & Rickman, Neil & Tzavara, Dionisia, 2004. "Legal expenses insurance, risk aversion and litigation," International Review of Law and Economics, Elsevier, vol. 24(1), pages 107-119, March.
    14. Choné, Philippe & Linnemer, Laurent, 2010. "Optimal litigation strategies with observable case preparation," Games and Economic Behavior, Elsevier, vol. 70(2), pages 271-288, November.
    15. Langlais, Eric, 2008. "Le "risque judiciaire" et les licenciements en France: le point de vue de l'économie du risque [The "judicial risk" and lay-offs in France from the point of view of the economic," MPRA Paper 8845, University Library of Munich, Germany.
    16. Anne Duchêne, 2017. "Patent Litigation Insurance," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 84(2), pages 631-660, June.
    17. Claudia M. Landeo, 2018. "Law and economics and tort litigation institutions: theory and experiments," Chapters, in: Joshua C. Teitelbaum & Kathryn Zeiler (ed.), Research Handbook on Behavioral Law and Economics, chapter 9, pages 247-268, Edward Elgar Publishing.
    18. 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.
    19. Pecorino, Paul & Van Boening, Mark, 2015. "Costly voluntary disclosure in a screening game," International Review of Law and Economics, Elsevier, vol. 44(C), pages 16-28.
    20. Giorgio Rampa & Margherita Saraceno, 2023. "Conjectures and underpricing in repeated mass disputes with heterogeneous plaintiffs," Journal of Economics, Springer, vol. 139(1), pages 1-32, June.

    More about this item

    Keywords

    litigation; asymmetric information on preferences; self-serving bias;
    All these keywords.

    JEL classification:

    • K10 - Law and Economics - - Basic Areas of Law - - - General (Constitutional Law)
    • K41 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Litigation Process
    • K13 - Law and Economics - - Basic Areas of Law - - - Tort Law and Product Liability; Forensic Economics
    • K40 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - General
    • K4 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:pra:mprapa:1150. 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: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.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.