Why Go to Court? Bargaining Failure under the Shadow of Trial with Complete Information
Why do legal disputes ever go to trial? Prior research emphasizes the role of mistakes, irrationalities, or asymmetric information because rational litigants with complete or symmetric information should choose pre-trial settlements over the costs and risks of trial. Using a dynamic incomplete-contracting framework, we provide an overlooked rationale for going to court. Even though risky and costly, going to court can be both rational and socially efficient when a court decision enhances property rights and deters future costly litigation. Experimental evidence supports these predictions. Our findings provide new insights into the incidence of litigation and trial.
|Date of creation:||May 2014|
|Contact details of provider:|| Postal: Irvine, CA 92697-3125|
Phone: (949) 824-5788
Web page: http://www.economics.uci.edu/
More information through EDIRC
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.:
- Che, Y.K. & Yi, J.G., 1991.
"The Role of Precedents in Repeated Litigation,"
9120, Wisconsin Madison - Social Systems.
- Stergios Skaperdas & Samarth Vaidya, 2012.
"Persuasion as a contest,"
Springer;Society for the Advancement of Economic Theory (SAET), vol. 51(2), pages 465-486, October.
- Stergios Skaperdas & Samarth Vaidya, 2008. "Persuasion as a Contest," Economics Series 2008_07, Deakin University, Faculty of Business and Law, School of Accounting, Economics and Finance.
- Stergios Skaperdas & Samarth Vaidya, 2007. "Persuasion as a Contest," CESifo Working Paper Series 2160, CESifo Group Munich.
- Stergios Skaperdas & Samarth Vaidya, 2007. "Persuasion as a Contest," Working Papers 070809, University of California-Irvine, Department of Economics.
- Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer;Economic Science Association, vol. 10(2), pages 171-178, June.
- Lucian Arye Bebchuk, 1984. "Litigation and Settlement under Imperfect Information," RAND Journal of Economics, The RAND Corporation, vol. 15(3), pages 404-415, Autumn.
- William M. Landes, 1974.
"An Economic Analysis of the Courts,"
in: Essays in the Economics of Crime and Punishment, pages 164-214
National Bureau of Economic Research, Inc.
- Farmer, Amy & Pecorino, Paul, 1999. "Legal Expenditure as a Rent-Seeking Game," Public Choice, Springer, vol. 100(3-4), pages 271-288, September.
- 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.
- Garfinkel, M.R. & Skaperdas, S., 2000.
"Conflict without Misperceptions or Incomplete Information: how the Future Matters,"
99-00-11, California Irvine - School of Social Sciences.
- Michelle R Garfinkel & Stergios Skaperdas, 2001. "Conflict Without Misperceptions or Incomplete Information: How the Future Matters," Levine's Working Paper Archive 563824000000000011, David K. Levine.
- Powell, Robert, 2006. "War as a Commitment Problem," International Organization, Cambridge University Press, vol. 60(01), pages 169-203, January.
When requesting a correction, please mention this item's handle: RePEc:irv:wpaper:131406. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jennifer dos Santos)
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.