Spite and retaliation in pretrial bargaining

Mehdi Ayouni (), Tim Friehe and Yannick Gabuthy ()
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Mehdi Ayouni: BETA - Bureau d'Économie Théorique et Appliquée - AgroParisTech - UNISTRA - Université de Strasbourg - Université de Haute-Alsace (UHA) - Université de Haute-Alsace (UHA) Mulhouse - Colmar - UL - Université de Lorraine - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement
Tim Friehe: Philipps Universität Marburg = Philipps University of Marburg, CESifo - LMU - Ludwig Maximilian University [Munich] = Ludwig Maximilians Universität München, EconomiX - EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique
Yannick Gabuthy: BETA - Bureau d'Économie Théorique et Appliquée - INRA - Institut National de la Recherche Agronomique - UNISTRA - Université de Strasbourg - UL - Université de Lorraine - CNRS - Centre National de la Recherche Scientifique

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Abstract: Why do disputes go to trial when parties agree about expected judgments? We model bargaining with private information about motives: plaintiffs may be spiteful, defendants may retaliate against spite. In the separating equilibrium, trials occur when spiteful plaintiffs meet retaliatory defendants, so observed trials are endogenously selected toward high-conflict pairings. In pooling equilibria, settlement is certain. Both types of equilibria can coexist for intermediate parameter values, suggesting small institutional changes can discontinuously affect trial rates.

Keywords: Litigation; Bargaining; Spite; Reciprocity (search for similar items in EconPapers)
Date: 2026-04
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Published in Economics Letters, 2026, 263, pp.112922. ⟨10.1016/j.econlet.2026.112922⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-05681182

DOI: 10.1016/j.econlet.2026.112922

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