Deterrence, Settlement, and Litigation Under Adversarial Versus Inquisitorial Systems

This paper analyzes deterrence, settlement, and litigation spending under two alternative procedural regimes, i.e., the adversarial versus inquisitorial systems. We present a general litigation model with three sequential stages---care, settlement, and litigation stages---and we test the predictions using experimental data. In line with the theory, the inquisitorial system is associated with less rent-seeking in court and better deterrence than the adversarial system, but is also characterized by a narrower bargaining range, which hinders settlement