The purpose of this chapter is to survey the academic literature on the economics of litigation and to synthesize its main themes. The chapter begins by introducing the basic economic framework for studying litigation and out-of-court settlement. One set of issues addressed is positive (or...

A central question in economics is understanding the difficulties that parties have in reaching mutually beneficial agreements. Informational differences provide an appealing explanation for bargaining inefficiencies. This chapter provides an overview of the theoretical and empirical literature...

We propose an elementary theory of wars fought by fully rational contenders that features three of the main rationalist explanations for armed conflicts: uncertainty, commitment, and indivisibility. Two parties play a Markov game that combines stages of bargaining, where offers are made, with...

The book investigates a two-person game of litigation and settlement with incomplete information on one side. The experimental design allows investigation of how subjects solve the bargaining problem. A prominence level analysis is applied to the data and suggests that subjects tend to choose...