NCJ Number
59833
Journal
Journal of Legal Studies Volume: 8 Issue: 2 Dated: (MARCH 1979) Pages: 295-302
Date Published
1979
Length
8 pages
Annotation
AN ECONOMIST EXAMINES AND REFORMULATES A MATHEMATICAL MODEL DEVELOPED BY LANDES AND POSNER (1979), WHICH ASSUMES THAT ADJUDICATION IS USED FOR PRIVATE BENEFIT, TAKING INTO ACCOUNT THE VARIABLE OF LITIGATION SPENDING.
Abstract
THE PREVIOUS MODEL (NCJ 59831) ASSUMES THAT PLAINTIFF A TRIES TO MAXIMIZE WEALTH BY AN APPROPRIATE CHOICE OF LITIGATION EXPENDITURES. THE CHOICE IS DEPENDENT ON PROBABILITY OF WINNING, SPENDING BY THE DEFENDANT (B), AND PRECEDENTS FAVORING THE PLAINTIFF. A FUNCTION DESCRIBING THE PLAINTIFF'S GAIN IN WEALTH FROM GOING TO TRIAL IS DERIVED. EQUILIBRIUM CHOICES ABOUT THE LEVEL OF LITIGATION EXPENDITURES ARE DETERMINED. THE MODEL INDICATES THAT THE DECISION ON WHETHER OR NOT TO LITIGATE DEPENDS ON WHETHER THERE IS ANY BARGAINING RANGE, AND THAT LARGER CASES ARE LESS LIKELY TO BE LITIGATED BECAUSE OF THEIR LITIGATION COSTS. PRECEDENTS MAY HAVE A POSITIVE, NEGATIVE, OR NEUTRAL EFFECT ON THE LIKELIHOOD OF LITIGATING DEPENDING ON THE RELATIVE SPENDING RESPONSES OF A AND B TO PRECEDENTS. THE LANDES-POSNER MODEL IS LIMITED BY ITS LACK OF CONSIDERATION OF THE OUTCOME'S EFFECTS ON FUTURE LIABILITY PROBABILITIES AND BY BEING STATIC RATHER THAN DYNAMIC. IT IS CONCLUDED THAT (1) THE PREVIOUS MODEL HAS TOO MANY UNRESOLVED PROBLEMS TO BE A FINAL ANSWER CONCERNING COMMON LAW'S ECONOMIC EFFICIENCY; (2) THE PREVIOUS MODEL IS USEFUL BECAUSE IT FORCES EXAMINATION OF THE PRIVATE LITIGANTS' DECISIONS, WHICH ARE CENTRAL TO THE QUESTION OF ECONOMIC EFFICIENCY; AND (3) THE LITIGANTS' PRIVATE DETERMINANTS APPROACH APPEARS MORE APPROPRIATE THAN DOES CONSIDERATION OF JUDGES' INCENTIVES TO FORMULATING AN ECONOMIC MODEL FOR JUDICIAL SYSTEMS' OPERATIONS. FOOTNOTES ARE INCLUDED. (CFW)