Frivolous suits in the infinitely-repeated litigation game with uncertainty
- Authors
- Kim I.[Kim I.]; Kim J.[Kim J.]
- Issue Date
- 2015
- Keywords
- American rule; British rule; Frivolous suit; Negative expected value suit; Settlement; Time cost; Uncertainty
- Citation
- Hitotsubashi Journal of Economics, v.56, no.1, pp.21 - 33
- Journal Title
- Hitotsubashi Journal of Economics
- Volume
- 56
- Number
- 1
- Start Page
- 21
- End Page
- 33
- URI
- https://scholarworks.bwise.kr/skku/handle/2021.sw.skku/48602
- Abstract
- We explain why 'frivolous suits (FS)' occur particularly under complete information. Existing analyses such as the 'traditional' and the 'early-defense-cost' models are not fully robust in that they either drop the plaintiff's withdrawal option or rely on a restrictive assumption that the defendant loses immediately unless he early defends himself at high cost. We pursue a more generalized explanation.We offer an infinite-period litigation model with uncertainty which reflects the reality more consistently.We then show that FS can occur as a subgame perfect equilibrium since the defendant over the pre-trial stage may settle with FS to save future time and/or trial costs.We further demonstrate that FS can occur even under the British rule of fee shifting. © 2015 Hitotsubashi University.
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Collections - Economics > Department of Economics > 1. Journal Articles
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