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Judicial detection skill and contractual compliance

  • Kirstein, Roland
  • Schmidtchen, Dieter

Mutually beneficial agreements might fail if the parties fear contractual opportunism. Litigation is supposed to be a remedy, but gives scope for another kind of opportunistic behavior which we call litigational opportunism: Even knowing that the opponent has fulfilled his obligations, a party might bring suit. We introduce a new concept, called judicial detection skill, and show that positive judicial detection skill is a prerequisite if the court system is to deter opportunistic suits and simultaneously induce bilateral contractual compliance. The traditional literature on litigation either assumes judges with zero detection skill, or simply neglects that opportunistic suits might be successful. We prove that those models are unable to provide an answer to the question of how to prevent both types of opportunism simultaneously.

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Article provided by Elsevier in its journal International Review of Law and Economics.

Volume (Year): 17 (1997)
Issue (Month): 4 (December)
Pages: 509-520

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Handle: RePEc:eee:irlaec:v:17:y:1997:i:4:p:509-520
Contact details of provider: Web page: http://www.elsevier.com/locate/irle

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  1. Miceli, Thomas J., 1993. "Optimal deterrence of nuisance suits by repeat defendants," International Review of Law and Economics, Elsevier, vol. 13(2), pages 135-144, June.
  2. Anderson, Gary M & Shughart, William F, II & Tollison, Robert D, 1989. "On the Incentives of Judges to Enforce Legislative Wealth Transfers," Journal of Law and Economics, University of Chicago Press, vol. 32(1), pages 215-28, April.
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  10. Shavell, Steven, 1995. "The Appeals Process as a Means of Error Correction," The Journal of Legal Studies, University of Chicago Press, vol. 24(2), pages 379-426, June.
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  12. Rasmusen, Eric, 1994. "Judicial Legitimacy as a Repeated Game," Journal of Law, Economics and Organization, Oxford University Press, vol. 10(1), pages 63-83, April.
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  15. Macey, Jonathan R, 1994. "Judicial Preferences, Public Choice, and the Rules of Procedure," The Journal of Legal Studies, University of Chicago Press, vol. 23(1), pages 627-46, January.
  16. Heiner, Ronald Asher & Schmidtchen, Dieter, 1995. "Rational Cooperation In One-Shot Simultaneous Pd-Situations," CSLE Discussion Paper Series 95-03, Saarland University, CSLE - Center for the Study of Law and Economics.
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  18. Schmidtchen, Dieter & Kirstein, Roland, 1996. "Judicial Detection Skill, Litigational Opportunism, and Contractual Compliance," CSLE Discussion Paper Series 96-04, Saarland University, CSLE - Center for the Study of Law and Economics.
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