Civil Justice Reform: A Mechanism Design Framework

Abstract

The main goal of the court system is to differentiate between those who obeyed the law and those who did not. We describe a mechanism design framework that facilitates the characterization of the set of procedural mechanisms that would minimize the resources used to achieve this goal. This framework can also help to formulate and evaluate procedural rules, and to identify necessary and sufficient conditions for deciding disputes according to substantive law with minimal costs of litigation and delay. We illustrate our approach using three examples: the design of fee-shifting rules, the design of discovery rules, and the use of third party alternative dispute resolution (ADR) mechanisms.

Keywords: civil justice, litigation, settlement, mechanism design, mediation, arbitration, discovery, fee shifting

JEL Classification: K40, K41