Document Type

Article

Publication Date

3-2007

Keywords

Rational choice theory, Evolutionary behavior, Individual behavior, Aggregate litigation, Litigation aversion

Disciplines

Law and Society | Litigation

Abstract

In the experimental game designed by GÜTH et al. [2007], player 1 has promised to render a service to player 2. Player 1 either invests proper effort or shirks and performance may succeed or fail depending on random fluctuation. When player 1 fails to invest proper effort, and performance occurs or not through luck, player 2 must decide whether to punish player 1’s nonperformance. When the transaction fails, punishment may be sought through suing. When the transaction fails, player 2 may seek revenge or punishment though doing so incurs costs to player 2. The game’s design resembles civil enforcement rather than criminal-type punishment. As the authors state, “Note that we are not dealing here with punishment in a criminal law sense, but rather with nondelivery of a service, which results in restitution regardless of whether there is any guilt involved” (GÜTH et al. [2007, p. 145]). The noncriminal nature of the punishment decision and the freedom to seek or not seek punishment are both reminiscent of systems of civil justice.

The experiment may provide important results with respect to rational choice theory and to evolutionary behavior. My focus is on the evidence the experiment provides about individuals’ inclination to sue. This experimental evidence resonates with real-world findings about individual behavior. The evidence also helps support recent movement towards authorizing aggregate litigation in several countries.

Publication Citation

Published in: Journal of Institutional and Theoretical Economics, vol. 163, no. 1 (March 2007).

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