Rent seeking with asymmetric players : an application to litigation expenditures

Abstract

This paper uses insights from the literature on rent-seeking contests toanalyze the expenditure decisions of a Defendant and a Plaintiff in the course of their legal battle. It is shown that the total amount of litigation expenditures is affected by the sequence of moves (protocols of interaction), differences in stakes, and the effectiveness of the parties (or the strength of their cases) and information asymmetries. In particular, it is shown that allowing for different stakes many of the results in the rent-seeking literature may not hold.