Axiomatic Formulation of the Optimal Transaction Cost Theory in the Legal Process through Cobb-Douglas Optimization

In a legal dispute, parties engage in series of negotiations so as to arrive at reasonable settlement. The need present fair and bargain order induce the WTA (willingness accept) plaintiff WTP(willingness pay) defendant. Cooperation can only be attained when is less than or equal WTP defendant, thus WTA≤WTP. From an economic perspective, process considered market place buying selling claims. High transaction costs decrease bargain, thereby making cooperation more appealing On other hand, low zero means dependent on expected gain from winning trial settlement benefit plaintiff. Hence, we find way adjusting number settlements with trials maximize social utility value. This paper uses Cobb-Douglas optimization formulate optimal cost algorithm considering confinement generalized framework.