"Confidence, Optimism, and Litigation : A Litigation Model under Ambiguity"
Nathalie Chappe (formerly University of Franche-Comté) Raphaël Giraud (THEMA-CY University and LED-University Paris 8)

This paper introduces ambiguity into a standard litigation model to explore how plaintiffs’ optimism regarding their probability of winning and confidence in their estimation of it impact settlement outcomes and defendant’s level of care. It also discusses the public policy implications in terms of monitoring the level of confidence. Key findings include that the probability of settlement rises with optimism for all plaintiffs, and with confidence for pessimistic plaintiffs if they’re sensitive to settlement offers. The level of care also increases in these cases. From a public policy perspective, if the government aims to minimize litigation and can only influence confidence, it should intervene to boost public confidence when plaintiffs are