Litigation with adversarial efforts

Roy Baharad, Chen Cohen, Shmuel Nitzan

Research output: Contribution to journalArticlepeer-review

Abstract

We consider a simple model of litigation contests in which each party dedicates both “case-advancing” efforts that directly increase her probability of winning, as well as “adversarial” efforts, which harm her opponent's strategy and decrease his likelihood of prevailing. Our model characterizes adversarial litigation efforts and the equilibrium investment in such efforts by both parties, subject to the value of winning and the costs of adversarial efforts vis-à-vis case-advancing ones. We find that litigation will always involve adversarial efforts if awards are sufficiently high, and that litigation in which most efforts are adversarial is a plausible scenario. Furthermore, in a relatively symmetric litigation that involves high awards, adversarial efforts increase the parties' likelihood of reaching a settlement agreement. In asymmetric cases, however, the existence of adversarial efforts inhibits settlement irrespective of the awards at stake.

Original languageEnglish
Article number106042
JournalInternational Review of Law and Economics
Volume69
DOIs
StatePublished - 1 Mar 2022

Keywords

  • Contest efforts
  • Litigation
  • Rent seeking
  • Sabotage

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics
  • Law

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