Author(s): Peter S. Menell
Year: 1983
Abstract:
This
article presents a game-theoretic model of costly litigation. The model
shows that where an injurer can calibrate the level of damages done to
other parties, it sacrifices in profits an amount related to the
victim’s litigation costs by inducing suit. Thus the structure of the
legal system implicitly internalizes the costs of litigation. Whether
complete internalization occurs depends on such considerations as the
information of the parties and the injurer’s ability to control damages
precisely.
Keywords:
Link: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2222388