Compensation of Damages and Frequency of Trials With Asymmetric Information on Preferences of Litigant Parties (Indemnisation Des Prejudices Et Frequence Des Proces En Presence D'Une Asymetrie D'Information Sur L'Aversion Au Risque Des Parties)
Louvain Economic Review, Vol 74, No 2, pp. 191-218, 2008
Posted: 18 Jun 2008
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Compensation of Damages and Frequency of Trials With Asymmetric Information on Preferences of Litigant Parties (Indemnisation Des Prejudices Et Frequence Des Proces En Presence D'Une Asymetrie D'Information Sur L'Aversion Au Risque Des Parties)
Abstract
The paper addresses the issue of the impact of asymmetric information on risk aversion of litigant parties in a model a la Bebchuk. First we study the case where the plaintiff is the informed party, and characterize the equilibrium with and without a pretrial negotiation round. Then, we focus on the comparative statistics of the model and analyze the role of the choice of a cost allocation rule. Finally, we discuss several extensions: the case where the defendant is the informed party, the influence of the assumption on the representation of preferences, and the role of self-serving bias.
Keywords: litiges, asymetrie d'information, biais de perception du risque
JEL Classification: D81, K42
Suggested Citation: Suggested Citation