Note—The Managerial Economics of Civil Litigation: A Note

In his paper, “The Managerial Economics of Civil Litigation,” Levy (Levy, F. K. 1985. The managerial economics of civil litigation. Management Sci.31 (March) 323–342.) develops a model to determine the optimal expenditures and maximal budgets for a plaintiff and a defendant in a civil suit. He uses a learning process to relate each litigant's probability of success to his level of expenditure. The specific learning process used is a difference equation where the rate of enhancement of probability is a constant fraction of the maximum possible gain. Levy's analysis would have been simpler if he had formulated that learning process as a differential equation.