How plaintiffs’ present bias and sophistication influence litigation contests

Abstract We investigate how a plaintiff’s present bias – the tendency to over-value immediate rewards and avoid immediate costs – and her self-awareness of this bias influence the dynamics of litigation. Plaintiffs with a stronger present bias are more likely to reduce and procrastinate litigation efforts. Counterintuitively, plaintiffs who are sophisticated about their own present bias may delay their efforts even more significantly than their naive counterparts, resulting in a particularly stark reduction in their returns. We, thus, show that strategic interaction can reverse the standard non-strategic prediction that sophistication mitigates procrastination. Our analysis concludes by demonstrating how the effect of present bias and self-awareness on total litigation effort, case accuracy, and filing behavior has varying implications for legal outcomes and social welfare, contingent on the intensity of the bias and the underlying merits of a case.