Optimal Multistage Adjudication

Louis Kaplow

No 23364, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: In many settings, there are preliminary or interim decision points at which legal cases may be terminated: e.g., motions to dismiss and for summary judgment in U.S. civil litigation, grand jury decisions in criminal cases, and agencies’ screening and other exercises of discretion in pursuing investigations. This article analyzes how the decision whether to continue versus terminate should optimally be made when (A) proceeding to the next stage generates further information but at a cost to both the defendant and the government and (B) the prospect of going forward, and ultimately imposing sanctions, deters harmful acts and also chills desirable behavior. This subject involves a mechanism design analogue to the standard value of information problem, one that proves to be qualitatively different and notably more complex. Numerous factors enter into the optimal decision rule – some expected, some subtle, and some counterintuitive. The optimal rule for initial or intermediate stages is also qualitatively different from that for assigning liability at the final stage of adjudication.

JEL-codes: D81 D82 K14 K41 K42 (search for similar items in EconPapers)
Date: 2017-04
New Economics Papers: this item is included in nep-law and nep-mic
Note: LE
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Published as Louis Kaplow, 2017. "Optimal Multistage Adjudication," The Journal of Law, Economics, and Organization, vol 33(4), pages 613-652.

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