Litigation with a Variable Cost of Trial

Farmer Amy () and Paul Pecorino ()
Additional contact information
Farmer Amy: Department of Economics, University of Arkansas, Fayetteville, AR 72701, USA

Review of Law & Economics, 2016, vol. 12, issue 2, 203-226

Abstract: We develop a model of pretrial bargaining under asymmetric information where both the plaintiff and the defendant’s cost of proceeding to trial is an increasing function of the judgment at trial. This contrasts with the standard assumption that costs at trial are a constant. As a result of this assumption, fee shifting can affect the incidence of trial in a model in which it would otherwise have no effect. Fee shifting will increase the incidence of trial if the plaintiff expects to shift the variable costs of trial to the defendant on net and will lower the incidence of trial if the defendant expects to shift these costs to the plaintiff. The model also implies that a reallocation of the variable costs of trial from the defendant to the plaintiff will lower the incidence of trial.

Keywords: pretrial bargaining; asymmetric information; trail costs (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://doi.org/10.1515/rle-2015-0004 (text/html)
For access to full text, subscription to the journal or payment for the individual article is required.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bpj:rlecon:v:12:y:2016:i:2:p:203-226:n:5

Ordering information: This journal article can be ordered from
https://www.degruyter.com/journal/key/rle/html

DOI: 10.1515/rle-2015-0004

Access Statistics for this article

Review of Law & Economics is currently edited by Francesco Parisi

More articles in Review of Law & Economics from De Gruyter
Bibliographic data for series maintained by Peter Golla ().