An Asymmetric Information Model of Litigation

42 Pages Posted: 25 Aug 2000

See all articles by Keith N. Hylton

Keith N. Hylton

Boston University - School of Law

Multiple version iconThere are 2 versions of this paper

Date Written: July 2000


This paper presents a cradle-to-grave model of tort liability, incorporating the decision to comply with the due-care standard, the decision to file suit, and the decision to settle. I use the model primarily to examine settlement rates, plaintiff win rates, and compliance with the due-care standard. The key results of the model are as follows: (1) litigation to judgment occurs only when some but not all actors comply with the due-care standard, and (2) if defendants have the information advantage at trial, plaintiff win rates generally will be less than fifty percent. I apply the model and its simulation results to several empirical issues in the litigation literature. The model simulation indicates that the British rule for allocating legal costs is superior to alternatives in terms of social welfare. In addition, the model is capable of explaining several empirical features of litigation and puzzles in the literature on trial outcomes.

JEL Classification: K41

Suggested Citation

Hylton, Keith N., An Asymmetric Information Model of Litigation (July 2000). Available at SSRN: or

Keith N. Hylton (Contact Author)

Boston University - School of Law ( email )

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