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Optimal Multistage Adjudication

Forthcoming, Journal of Law, Economics, & Organization (2017)

Harvard Law School John M. Olin Center Discussion Paper No. 904

Harvard Public Law Working Paper No. 17-11

35 Pages Posted: 24 Apr 2017 Last revised: 19 May 2017

Louis Kaplow

Harvard Law School; National Bureau of Economic Research (NBER)

Multiple version iconThere are 2 versions of this paper

Date Written: April 24, 2017

Abstract

In many settings, there are preliminary or interim decision points at which legal cases may be terminated: e.g., motions to dismiss and for summary judgment in U.S. civil litigation, grand jury decisions in criminal cases, and agencies’ screening and other exercises of discretion in pursuing investigations. This article analyzes how the decision whether to continue versus terminate should optimally be made when (A) proceeding to the next stage generates further information but at a cost to both the defendant and the government and (B) the prospect of going forward, and ultimately imposing sanctions, deters harmful acts and also chills desirable behavior. This subject involves a mechanism design analogue to the standard value of information problem, one that proves to be qualitatively different and notably more complex. Numerous factors enter into the optimal decision rule – some expected, some subtle, and some counterintuitive. The optimal rule for initial or intermediate stages is also qualitatively different from that for assigning liability at the final stage of adjudication.

Keywords: Litigation, law enforcement, adjudication, courts, screening, burden of proof, value of information, mechanism design

JEL Classification: D81, D82, K14, K41, K42

Suggested Citation

Kaplow, Louis, Optimal Multistage Adjudication (April 24, 2017). Harvard Law School John M. Olin Center Discussion Paper No. 904; Harvard Public Law Working Paper No. 17-11. Available at SSRN: https://ssrn.com/abstract=2955292 or http://dx.doi.org/10.2139/ssrn.2955292

Louis Kaplow (Contact Author)

Harvard Law School ( email )

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