Optimal damages with court delay and heterogenous time preferences

Vereeck and Mühl (2000) distinguish four periods within the waiting time between conflict and court decision: the negotiation time between parties; the procedural time to prepare the trial; the waiting time before the actual start of the trial; and the time of the trial itself. They argue that while data on court delay often include the last three periods, only the third can be considered as genuine court delay since it depends on the performance of the courts. Di Vita (2010) review four different explanations for the excessive duration of controversies. First, as emphasized by Buscaglia and Dakolias (1996), the courts’ effi ciency might be insuffi cient due to a lack of resources devoted to the justice and/or to its defective organization. Second, following Vereeck and Mühl (2000), the complexity and the diversity of the law can itself be a source of conflict and, indirectly, of the total amount of litigation. Third, as argued by Djankov et al. (2003), the trial procedures allow the litigants to lengthen the time required to reach a decision, thus prolonging civil disputes. Finally, there is the possibility that both the judges (Palumbo and Sette, 2006) and the lawyers (Dewatripont and Tirole, 1999; Djankov et al., 2003; Djankov, McLiesh and Ramalho, 2006; Emons, 2000; Marchesi, 2003; Miceli, 1994) may benefit from longer court delays.