Private participation in public policy: the economics of strategic lawsuits against public participation

Terrance Hurley

ISU General Staff Papers from Iowa State University, Department of Economics

Abstract: The primary purpose of this dissertation is to construct a game theoretic model to explore the economic incentives encouraging strategic lawsuits against public participation (SLAPPs), and to explore the efficiency consequences of eliminating SLAPPs. The model that is constructed is a two-stage contest with asymmetric incomplete information regarding agents' benefits. Using the perfect Bayesian equilibrium concept, equilibrium behavior is characterized assuming a ratio contest success function with asymmetric abilities. Comparative static results are derived for the second-stage of the contest, and efficiency is evaluated using contest efficiency as the primitive measure of efficiency where the concept of contest efficiency is developed in an appendix. Given the general ambiguity of the analytic efficiency results, the contest success function is parameterized and efficiency is evaluated assuming that the firm has normal and uniform a priori beliefs regarding the distribution of the homeowner's benefit of winning the contest. Finally, the predictive power of the perfect Bayesian equilibrium concept and the intuitive refinement is tested using experimental methods and a specific case of the general SLAPP model. The primary conclusions are that SLAPPs represent a strategic commitment of effort by an agent with incomplete information and relatively low benefits and/or ability to reduce the total amount of effort invested in the contest, and that the elimination of SLAPPs will either reduce or have no effect on the efficiency of the contest.

Date: 1995-01-01
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