The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Litigation, Economics of

  • Kathryn E. Spier
Reference work entry
DOI: https://doi.org/10.1057/978-1-349-95189-5_2492

Abstract

This article begins by introducing the basic economic framework for studying litigation and out-of-court settlement. One set of issues addressed is positive (or descriptive) in nature. Under what conditions will someone decide to file suit? When do cases settle out of court? Normative issues are also addressed. Are these private litigation decisions in the interest of society more broadly? Next, the article surveys some of the more active areas in the litigation literature including rules of evidence, loser-pays rules, appeals, contingent fees for attorneys, alternative dispute resolution, class actions, and plea bargaining.

Keywords

Adverse selection Alternative dispute resolution Asymmetric information Bargaining Contingent fees Dispute resolution English Rule Environmental Protection Agency Insurance contracts Liability Litigation economics of Moral hazard Most-favourednation clauses Negative expected value Patents Posner R. Superfund Symmetric information Transaction costs 

JEL Classifications

K41 
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Notes

Acknowledgment

The author thanks the Searle Fund for financial support.

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© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • Kathryn E. Spier
    • 1
  1. 1.