Background Note for Law & Economics Workshop Students Concerning The Reduced Form of Litigation Selection Models and the Plaintiff's Win Rate

Issues related to the plaintiff’s win rate in litigated cases have been discussed, and contested, for more than 30 years. In a seminal paper, Priest and Klein (1984) pointed out that it’s not an accident that some cases are litigated while others aren’t. Consider a simple litigation system that has essentially no procedural law. When disputes materialize, the parties may take them to court for a simple, one-shot adjudication in which one side or the other wins immediately (here, winning means paying nothing, if the defendant wins, or a damages judgment if the plaintiff does). Of course, the parties are also free to settle their dispute on mutually agreeable terms without going to court.