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An analysis of bounded rationality in judicial litigations: the case with loss/disappointment averses plaintiffs

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  • Langlais, Eric

Abstract

For psychologists, bounded rationality reflects the presence of cognitive dissonance and/or inconsistency, revealing that people use heuristics (Tversky and Kahneman (1974)) rather than sophisticated processes for the assessment of their beliefs. Recent research analyzing litigations and pretrial negotiations also focused on boundedly rational litigants (Bar-Gill (2005), Farmer and Peccorino (2002)) relying on a naïve modelling of the self-serving bias. Our paper in contrast introduces the case for disappointment averse litigants, relying on the axiomatic of Gull (1991). We show that this leads to a richer analysis in comparative statics; at the same time, this proves to be … disappointing: for the purposes of public policies in favour of the access to justice, recommendations are quite ambiguous.

Suggested Citation

  • Langlais, Eric, 2010. "An analysis of bounded rationality in judicial litigations: the case with loss/disappointment averses plaintiffs," MPRA Paper 22291, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:22291
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    1. Jeffrey J. Rachlinski & Chris Guthrie & Andrew J. Wistrich, 2007. "Heuristics and Biases in Bankruptcy Judges," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 163(1), pages 167-186, March.
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    Cited by:

    1. Cédric Argenton & Xiaoyu Wang, 2023. "Litigation and settlement under loss aversion," European Journal of Law and Economics, Springer, vol. 56(2), pages 369-402, October.

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    More about this item

    Keywords

    conflicts; litigation; negotiation; disappointment aversion.;
    All these keywords.

    JEL classification:

    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • K13 - Law and Economics - - Basic Areas of Law - - - Tort Law and Product Liability; Forensic Economics
    • K41 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Litigation Process
    • K31 - Law and Economics - - Other Substantive Areas of Law - - - Labor Law
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games

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