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Frivolous Suits In The Infinitely-Repeated Litigation Game With Uncertainty

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  • KIM, ILJOONG
  • KIM, JAEHONG

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.

Suggested Citation

  • Kim, Iljoong & Kim, Jaehong, 2015. "Frivolous Suits In The Infinitely-Repeated Litigation Game With Uncertainty," Hitotsubashi Journal of Economics, Hitotsubashi University, vol. 56(1), pages 21-33, June.
    • Handle: RePEc:hit:hitjec:v:56:y:2015:i:1:p:21-33
    DOI: 10.15057/27196
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    References listed on IDEAS

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    More about this item

    Keywords

    frivolous suit; negative expected value suit; uncertainty; time cost; settlement; American rule; British rule;
    All these keywords.

    JEL classification:

    • K4 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior
    • H4 - Public Economics - - Publicly Provided Goods

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