A Note on Trial Delay and Social Welfare: The Impact of Multiple Equilibria
-
Tim Friehe
and
Thomas J. Miceli
Abstract
Greater trial delay is commonly associated with decreasing demand for trials, thereby bringing about an equilibrium for a given trial capacity. This note highlights that – in contrast to this premise – trial delay may in fact increase trial demand. Such an outcome is established for a scenario in which the number of cases is endogenous based on the deterrence effect of lawsuits. That trial demand may increase with longer delay makes multiple stable equilibria possible. This reality has important policy implications, which are discussed.
Acknowledgments
Tim Friehe is thankful for the hospitality of the University of Connecticut, where this project was completed during a research visit. Both authors acknowledge the very helpful comments of two reviewers.
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Articles in the same Issue
- The Economics of Scams
- Why Agents Need Discretion: The Business Judgment Rule as Optimal Standard of Care
- Voting Rules in Bankruptcy Law
- A Note on Trial Delay and Social Welfare: The Impact of Multiple Equilibria
- Malice Aforethought
- Weak Law v. Strong Ties: An Empirical Study of Business Investment, Law and Political Connections in China
- Estimating Judicial Ideal Points in Latin America: The Case of Argentina
