Litigation and Settlement

Standard economic models of litigation and settlement conceive of litigation and settlement decision-making as a process in which legal actors—litigants and their attorneys—rationally maximize expected utility. While such models provide a helpful structure for understanding litigation decision-making, litigants and their attorneys may not always behave and decide in ways that follow the assumptions of the economic models. Predicting expected outcomes, setting goals, interacting with adversaries, gathering and using information, and weighing options all present challenges for decision-makers. In addition, the dynamic interaction between lawyer and client can influence whether and how cases are settled. Recognizing the variety of psychological phenomena that make it challenging for litigants and their attorneys to identify and choose the best litigation options can make for a richer and more accurate understanding of litigation decision-making.