Deterrence effects under Twombly: on the costs of increasing pleading standards in litigation

Sergio Campos, Christopher Cotton and Cheng Li

MPRA Paper from University Library of Munich, Germany

Abstract: We develop a stylized game theoretic model of litigant behavior to study the effects of increased pleading standards on incentives to engage in illegal activity. Such a model is necessary to build intuition about the potential costs associated with the procedures set forth by the U.S. Supreme Court in Bell Atlantic Corp. v. Twombly (550 U.S. 544 [2007]) and Ashcroft v. Iqbal (556 U.S. 662, 684 [2009]), which increase the standard of plausibility that lawsuits must meet before being allowed by a judge to proceed to discovery and trial. We show how increasing pleading standards tends to increase illegal activity, and can increase litigation costs. These negative effects should be accounted for when setting a pleading standard. Our results provide a counterpoint to the U.S. Supreme Court’s argument that increased plausibility requirements will decrease the costs of litigation.

Keywords: Judicial procedure; pleading; litigation; deterrence (search for similar items in EconPapers)
JEL-codes: C72 K41 (search for similar items in EconPapers)
Date: 2015-05
New Economics Papers: this item is included in nep-gth and nep-law
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Journal Article: Deterrence effects under Twombly: On the costs of increasing pleading standards in litigation (2015)
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