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The Unexpected Value Of Litigation: A Real Options Perspective, Joseph A. Grundfest, Peter H. Huang
The Unexpected Value Of Litigation: A Real Options Perspective, Joseph A. Grundfest, Peter H. Huang
Publications
In this Article, we suggest that litigation can be analyzed as though it is a competitive research and development project. Developing this analogy, we present a two-stage real option model of the litigation process that involves sequential information revelation and bargaining over the surplus generated by early settlement. Litigants are risk-neutral and have no private information. The model generates results that, we believe, have analytic and normative significance for the economic analysis of litigation
From an analytic perspective, we demonstrate that negative expected value (NEV) lawsuits are analogous to out of the money call options held by plaintiffs and that …
How Much Justice Can We Afford?: Defining The Courts' Roles And Deciding The Appropriate Number Of Trials, Settlement Signals, And Other Elements Needed To Administer Justice, John M. Lande
Faculty Publications
This article discusses how the U.S. court system can function optimally given declining trial rates and the limited resources available. The question of how much justice we can afford is a challenge that becomes more difficult as budgets fall behind the increasing demand for and cost of court services. Presumably most analysts would agree that courts should try cases when appropriate - and help litigants find just resolutions without trial when it is not needed. The courts' ability to provide trials in some cases is possible only if the vast majority of other cases are not tried.This article provides background …