A note on the timing of investments in litigation contests

Abstract

Allowing the plaintiff and defendant to choose the order in which they invest effort into trial, we show that the timing of litigation efforts is critically dependent on the level of defendant fault. For a high (low) level of defendant fault, the plaintiff invests after (before) the defendant’s investment choice. The equilibrium order of litigation efforts in turn is decisive for (a) the level of total litigation effort, (b) justice achieved by the litigation contest, and (c) plaintiffs’ incentives to bring suit. As a result, the endogenous timing bears vital implications for policy makers.