Settlement, Litigation, and the Allocation of Litigation Costs

Reinganum, Jennifer F.; Wilde, Louis L.

doi:10.2307/2555481

Cited by 429 publications

(216 citation statements)

References 7 publications

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“…Our paper also follows recent papers exemplified by Bebchuk (1984), Grossman and Katz (1983), Nalebuf (1987Nalebuf ( ), P ng (1983Nalebuf ( , 1987, Reinganum (1988), Reinganum and Wilde (1986), Salant (1984), Sobel (1989) who employ game theory to study the resolution of legal disputes. However, unlike these papers which explain the incidence of pretrial negotiation and settlement, our paper focuses on the trial or hearing phase.…”

mentioning

confidence: 67%

Disclosure of Information in Regulatory Proceedings

Lewis

Poitevin

1997

Journal of Law, Economics, and Organization

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confidence: 67%

Disclosure of Information in Regulatory Proceedings

Lewis

Poitevin

1997

Journal of Law, Economics, and Organization

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“…The literature on litigation and settlement under incomplete information has often suggested that the American fee allocation rule, according to which each party bears its own litigation cost irrespective of the outcome at trial, induces a higher rate of settlement than the English fee-shifting rule [see Bebchuk (1984) and Talley (1995), but also Reinganum and Wilde (1986), who argued the ranking is indeterminate]. Some economic and legal scholars have investigated the welfare properties of different fee allocation rules, 7 and there is also 6.…”

Section: Introductionmentioning

confidence: 99%

Against Compromise: A Mechanism Design Approach

Klement

Neeman

2005

Journal of Law, Economics, and Organization

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A risk-neutral plaintiff sues a risk-neutral defendant for damages that are normalized to one. The defendant knows whether she is liable or not, but the plaintiff does not. We ask what are the settlement procedures and fee-shifting rules (which, together, we call a mechanism) that minimize the rate of litigation subject to maintaining deterrence. Two main results are presented. The first is a characterization of an upper bound on the rate of settlement that is consistent with maintaining deterrence. This upper bound is shown to be independent of the litigants' litigation cost. It is shown that any mechanism that attains this bound must employ the English fee-shifting rule (according to which all litigation costs are shifted to the loser in the trial). The second result describes a simple practicable mechanism that attains this upper bound. We discuss our results in the context of recent legal reforms in the United States and United Kingdom.

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“…4 Besides the literature on settlement, see also contributions vis-à-vis alternative dispute resolution (e.g., Shavell 1995). 5 Settlement is often designed as an ultimatum game in one round, as seen in, for example, Bebchuk (1984), P'ng (1983), andReinganum andWilde (1986). On multiple-round settlement, see Spier (1992) and Wang et al (1994).…”

Section: Litigation Versus Settlement (In the Shadow Of The Court)mentioning

confidence: 99%

Justice: Greater Access, Lower Costs

Saraceno

2014

SSRN Journal

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General rightsIt is not permitted to download or to forward/distribute the text or part of it without the consent of the author(s) and/or copyright holder(s), other than for strictly personal, individual use, unless the work is under an open content license (like Creative Commons). Disclaimer/Complaints regulationsIf you believe that digital publication of certain material infringes any of your rights or (privacy) interests, please let the Library know, stating your reasons. In case of a legitimate complaint, the Library will make the material inaccessible and/or remove it from the website. Please Ask the Library: http://uba.uva.nl/en/contact, or a letter to: Library of the University of Amsterdam, Secretariat, Singel 425, 1012 WP Amsterdam, The Netherlands. You will be contacted as soon as possible. AbstractLitigation imposes large costs on society; this justifies settlement considerations. In any case, access to justice is critical to socioeconomic development; as such, it needs to be balanced with litigation minimization. This study examines the tradeoff between litigation and access to justice and explicitly elucidates their relationship. In considering access issues, this study finds that the outcomes of policies that affect parties' litigation decisions partially depart from those in the standard literature. For instance, increasing parties' litigation costs does not necessarily promote settlement in the shadow of the court.Rather, effects depend on the elasticity of the demand for legal remedies. Furthermore, even while pushing litigation, enhancing access to justice is efficient as long as the claimant's marginal propensity to litigate is smaller than the social opportunity-cost of access to justice. This finding offers further insight into the suitability of litigation subsidization through legal aid.JEL classification: K41.

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Settlement, Litigation, and the Allocation of Litigation Costs

Cited by 429 publications

References 7 publications

Disclosure of Information in Regulatory Proceedings

Disclosure of Information in Regulatory Proceedings

Against Compromise: A Mechanism Design Approach

Justice: Greater Access, Lower Costs

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