We model a negligence standard where the defendant's level of care is viewed with error by the judicial system. All cases are assumed to settle prior to trial, but the negotiated outcome reflects the expected outcome at trial. The policymaker may or may not be able to induce the optimal level of...

In a model of pretrial bargaining under asymmetric information, we analyze the defendant’s threat to proceed to trial in the face of a rejected offer. The incidence of trial is lower when the defendant’s constraint is binding compared with the unconstrained case. The signs of some of the...

We consider a model of litigation in which some defendants have insufficient assets to pay a judgment at trial. Because the defendant's assets are not observable, this serves as a source of asymmetric information which leads to trials in the equilibrium of the model. Unlike many other types of...