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SEMINAR: Economics Discipline Seminar

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Today's date is Wednesday, June 23, 2021
Economics Discipline Seminar : Litigation as a Tournament Other events...
This paper analyzes civil litigation between a plaintiff and a defendant who exert costly effort in a tournament game. In the unique Nash equilibrium the litigant with the stronger case is more likely to win, but there is distortion in the sense that the equilibrium probability of success is closer to 0.5 than the prior is. A cost-shifting rule determines the proportion of the winner's costs recoverable from the loser. An increase in the proportion of recoverable costs reduces distortion to the inherent strength of the case, but it also reduces the total welfare of the litigants because it increases litigation costs. In a modified litigation game with judicial management, a judge chooses the optimal cost-shifting rule to minimize both private costs spent on litigation and distortion to inherent strength of the case. In the unique subgame perfect equilibrium, the judge's choice of optimal proportion of recoverable costs increases with the relative weight which she assigns to distortion and with the weight given to the inherent strength of the case. Litigation is less likely to take place as the relative weight which the judge assigns to distortion increases.

Keywords: Tournament Theory, Litigation Process, Legal Dispute. JEL Classi cation: C72, C79, K41.
Speaker(s) Jose Alvaro Rodrigues Neto
Location BUSN: 101
Contact Leandro Magnusson <[email protected]>
Start Fri, 12 Sep 2014 12:00
End Fri, 12 Sep 2014 13:15
Submitted by Leandro Magnusson <[email protected]>
Last Updated Mon, 13 Oct 2014 15:47
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