An Analysis of Bounded Rationality in Judicial Litigations: The Case with Loss/Disappointment Averse Plaintiffs
EconomiX, CNRS & University of Paris Ouest
April 1, 2010
Journal of Advanced Research in Law & Economics, Vol. 1, No. 1, pp. 42-50, Summer 2010
For psychologists, bounded rationality reflects the presence of cognitive dissonance and/or inconsistency, revealing that people use heuristics (Tversky and Kahneman (1974)) rather than sophisticated processes for the assessment of their beliefs. Recent research analyzing litigations and pretrial negotiations also focused on boundedly rational litigants (Bar-Gill (2005), Farmer and Peccorino (2002)) relying on a naïve modelling of the self-serving bias. Our paper in contrast introduces the case for disappointment averse litigants, relying on the axiomatic of Gull (1991). We show that this leads to a richer analysis in comparative statics; at the same time, this proves to be...disappointing: for the purposes of public policies in favour of the access to justice, recommendations are quite ambiguous.
Number of Pages in PDF File: 11
Keywords: conflicts, litigation, negotiation, disappointment aversion
JEL Classification: D81, K42Accepted Paper Series
Date posted: April 26, 2010 ; Last revised: October 9, 2010
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