Edited by Gerrit De Geest
[In: Volume 8, Chris William Sanchirico (ed) Procedural Law and Economics]
This volume of the Encyclopedia of Law and Economics gathers entries on the main issues covered in the scholarly, economics-based literature on litigation, procedure, and evidence. This second edition of the volume includes several new entries. Some of these bridge gaps in the first edition; others reflect significant new trends in research. Moreover, several entries that appeared in the first edition have been substantially refined and updated to reflect the many new contributions that have been put forward in the decade since the first edition was published.
Lawyer-economists began studying procedure and evidence in earnest in the late 1960s and early 1970s. The earliest contributions include Landes (1971), Gould (1973), and Posner (1973) – all of which were influenced by Becker (1968). The issues raised in these early contributions became the chief focal points of the ensuing four decades of scholarship in the area. These issues are covered in detail in this volume. Thus, Andrew Daughety and Jennifer Reinganum’s chapter, “Settlement”, concerns the vast theoretical literature on pre-trial bargaining. Reflecting advances in this research area over time, Daughety and Reinganum frame their analysis within the general conceptual taxonomy of game theory, thus helping the reader to understand what does and does not distinguish bargaining in the litigation context from bargaining in other areas. Likewise, Avery Katz and Chris Sanchirico’s chapter, “Fee Shifting”, considers another classic issue: how varying rules for allocating the cost of litigation among the litigating parties affects potential plaintiffs’ incentives to file suit and the likelihood that litigants will settle out of court. The entry presents the literature’s main theoretical results and also digests some recent empirical findings. Lucian A. Bebchuk and Alon Klement contribute a chapter on “Negative-Expected-Value Suits”, which describes a relatively new segment of the literature on filing incentives and settlement. These new papers attempt to solve the puzzle of why defendants sometimes seem to settle lawsuits with plaintiffs whose expected litigation costs exceed their expected trial winnings. Thomas Miceli’s chapter, “The Social versus Private Incentive to Sue”, considers the private decision to file suit from a normative rather than a positive perspective. The question he addresses – another classic in this area – is whether the configuration of private incentives generates too many or too few lawsuits from a social perspective. Keith Hylton and Haizhen Lin, in their chapter “Trial Selection Theory p. xand Evidence”, consider how out of court settlement filters disputes, causing those cases that are fully litigated to differ from those that are filed. This has long been of concern to legal scholars, whose analytical methods include the study of published opinions and often rely implicitly on the assumption that such opinions are representative of the underlying population of disputes.
These are the central issues considered by the extant economic research on procedure and evidence. However, they are not necessarily comprehensive of the central issues of concern to litigators and policy makers. A number of the entries in this volume directly address questions that are important to the institution of litigation, but have not thus far received the same intensity of attention from economics-oriented researchers. These may be organized roughly according to where they appear along the litigation timeline. Robert Bone’s chapter, “Class Action”, reviews research on a device for initiating and prosecuting suit that, although anciently rooted, has gained prominence and sparked intense controversy over the last half century. Robert Bone also contributes a chapter on “Discovery”, an institutional frame for pre-trial fact finding that appears to be far more central to actual civil litigation than to economic research thereon. Erin O’Hara O’Connor and Larry Ribstein’s chapter, “Conflict of Laws and Choice of Law”, concerns how courts decide which substantive law governs when a dispute involves parties, property or events located in more than one jurisdiction. O’Hara O’Connor and Ribstein also consider the enforcement of private contractual provisions that specify which substantive law is to govern the parties’ dealings. How the organization of the courts affects judicial decision making is the subject of Lewis Kornhauser’s chapter on “Judicial Organization and Administration”. Kornhauser’s related chapter on “Appeal and Supreme Courts” examines the implications of the hierarchal structure of the court system. Lastly, the chapter, “Preclusion”, by Robert Bone focuses on how court decisions affect future litigation.
Several of the chapters in the volume reflect new trends in research over the last decade. The bulk of these concern the nature and design of judicial fact finding. Chris Sanchirico’s chapter, “Evidence: Theoretical Models”, reviews the several formal approaches to the question of how fact finders do and should make decisions regarding factual, as opposed to legal, issues. Most economic research on litigation focuses on filing incentives and settlement, and accordingly provides only a cursory account of fact finding. Sanchirico’s chapter reviews the several attempts to bring probability theory and game theory to bear on that which filing initiates and settlement averts. Sanchirico’s chapter, “Detection Avoidance and Enforcement Theory”, studies how accounting for violators’ incentives to p. xiconceal and fabricate evidence alters the conventional economic model of enforcement. Luke Froeb and Bruce Kobayashi’s chapter on “Adversarial versus Inquisitorial Justice” surveys the economic literature on a fundamental issue of evidentiary design: the degree to which the fact finder should play an active role in investigation and interrogation. Two chapters, one by Gillian Hadfield and Shmuel Leshem and one by Alex Stein, consider specific evidentiary questions that have been the subject of recent research. Both questions fall within the evidentiary subfield of privileges. Hadfield and Leshem’s chapter, “Attorney-Client Confidentiality”, reviews the economic literature on the privilege accorded to certain communications between lawyer and client. Stein’s chapter, “Self-incrimination”, considers economic approaches to the “right to silence”, including the privilege accorded to criminal defendants to decline to testify.
Lastly, Thomas Miles’ chapter “Criminal Procedure: Empirical Analysis”, reflects the trend toward empirical research in modern law and economics. Empirical findings are reviewed in several of the other entries, but, representative of the field itself, the volume’s entries are most heavily populated with theoretical contributions. Miles specifically reviews the empirical research on criminal procedure, including the statistical evidence on racial profiling, bail, plea bargaining, and racial disparities in sentencing.